NC General Statutes - Chapter 105 1 ... - Onslow County

NC General Statutes - Chapter 105 1

Chapter 105.

Taxation.

SUBCHAPTER I. LEVY OF TAXES.

§ 105-1. Title and purpose of Subchapter.

The title of this Subchapter shall be "The Revenue Act." The purpose of this Subchapter shall

be to raise and provide revenue for the necessary uses and purposes of the government and State

of North Carolina during the next biennium and each biennium thereafter, and the provisions of

this Subchapter shall be and remain in full force and effect until changed by law. It is the policy

of this State that as many State taxes as possible be structured so that they are deductible for

federal income tax purposes under the Internal Revenue Code. (1939, c. 158, ss. A, B; 1941, c.

50, s. 1; 1983 (Reg. Sess., 1984), c. 1097, s. 1.)

§ 105-1.1. Supremacy of State Constitution.

The State's power of taxation is vested in the General Assembly. Under Article V, Section

2(1), of the North Carolina Constitution, this power cannot be surrendered, suspended, or

contracted away. In the exercise of this power, the General Assembly may amend or repeal any

provision of this Subchapter in its discretion. No provision of this Subchapter constitutes a

contract that the provision will remain in effect in future years, and any representation made to

the contrary is of no effect. (2003-416, s. 12.)

Article 1.

Inheritance Tax.

§§ 105-2 through 105-32: Repealed by Session Laws 1998-212, s. 29A.2(a), effective January

1, 1999, and applicable to the estates of decedents dying on or after that date.

Article 1A.

Estate Taxes.

§ 105-32.1: Repealed by Session Laws 2013-316, s.7(a), effective January 1, 2013, and

applicable to the estates of decedents dying on or after that date.
















Article 2.

Privilege Taxes.

§ 105-33. Taxes under this Article.

(a) General. – Taxes in this Article are imposed for the privilege of carrying on the

business, exercising the privilege, or doing the act named.

(b) License Taxes. – A license tax imposed by this Article is an annual tax. The tax is due

by July 1 of each year. The tax is imposed for the privilege of engaging in a specified activity

during the fiscal year that begins on the July 1 due date of the tax. The full amount of a license

tax applies to a person who, during a fiscal year, begins to engage in an activity for which this

Article requires a license. Before a person engages in an activity for which this Article requires a

license, the person must obtain the required license.

(c) Other Taxes. – The taxes imposed by this Article on a percentage basis or another

basis are due as specified in this Article.

(d) Repealed by Session Laws 1998-95, s. 2.

(e) Repealed by Session Laws 1989, c. 584, s. 1.

(f), (g) Repealed by Session Laws 1998-95, s. 2.

(h) Liability Upon Transfer. – A grantee, transferee, or purchaser of any business or

property subject to the State taxes imposed in this Article must make diligent inquiry as to

whether the State tax has been paid. If the business or property has been granted, sold,

transferred, or conveyed to an innocent purchaser for value and without notice that the vendor

owed or is liable for any of the State taxes imposed under this Article, the property, while in the

possession of the innocent purchaser, is not subject to any lien for the taxes.

(i), (j) Repealed by Session Laws 1998-95, s. 2.

(k) Repealed by Session Laws 1987, c. 190. (1939, c. 158, s. 100; 1943, c. 400, s. 2;

1951, c. 643, s. 2; 1953, c. 981, s. 1; 1963, c. 294, s. 3; 1973, c. 476, s. 193; 1977, c. 657, s. 1;

1981, c. 83, ss. 1, 2; 1985, c. 114, s. 10; 1985 (Reg. Sess., 1986), c. 826, ss. 1, 2; c. 934, s. 3;

1987, c. 190; 1989, c. 584, s. 1; 1989 (Reg. Sess., 1990), c. 814, s. 1; 1991 (Reg. Sess., 1992), c.

981, s. 1; 1993, c. 539, s. 688; 1994, Ex. Sess., c. 24, s. 14(c); 1996, 2nd Ex. Sess., c. 14, ss. 18,

19; 1998-95, ss. 1, 2.)

§ 105-33.1. Definitions.

The following definitions apply in this Article:

(1) City. – Defined in G.S. 105-228.90.


(1a) Code. – Defined in G.S. 105-228.90.

(2) Repealed by Session Laws 1998-95, s. 3.

(3) Person. – Defined in G.S. 105-228.90.

(4) Secretary. – Defined in G.S. 105-228.90. (1991, c. 45, s. 1; 1991 (Reg. Sess.,

1992), c. 922, s. 2; 1993, c. 12, s. 3; c. 354, s. 6; 1998-95, s. 3.)

§ 105-34: Repealed by Session Laws 1979, c. 63.


§§ 105-36 through 105-37: Repealed by Session Laws 1996, Second Extra Session, c. 14, s.

17.

§ 105-37.1: Repealed by Session Laws 2013-316, s. 5(a), effective January 1, 2014, and

applicable to gross receipts derived from an admission charge sold at retail on or after

that date.

§ 105-37.2: Repealed by Session Law 1998-96, s. 3.

§ 105-38: Repealed by Session Laws 1999-337, s. 14(b).

§ 105-38.1: Repealed by Session Laws 2013-316, s. 5(a), effective January 1, 2014, and

applicable to gross receipts derived from an admission charge sold at retail on or after

that date.

§ 105-39. Repealed by Session Laws 1987 (Reg. Sess., 1988), c. 1082, s. 1.)

§ 105-40: Repealed by Session Laws 2013-316, s. 5(a), effective January 1, 2014, and applicable

to gross receipts derived from an admission charge sold at retail on or after that date.

§ 105-41. Attorneys-at-law and other professionals.

(a) Every individual in this State who practices a profession or engages in a business and

is included in the list below must obtain from the Secretary a statewide license for the privilege

of practicing the profession or engaging in the business. A license required by this section is not

transferable to another person. The tax for each license is fifty dollars ($50.00).

(1) An attorney-at-law.

(2) A physician, a veterinarian, a surgeon, an osteopath, a chiropractor, a

chiropodist, a dentist, an ophthalmologist, an optician, an optometrist, or

another person who practices a professional art of healing.

(3) A professional engineer, as defined in G.S. 89C-3.

(4) A registered land surveyor, as defined in G.S. 89C-3.

(5) An architect.

(6) A landscape architect.


(7) A photographer, a canvasser for any photographer, or an agent of a

photographer in transmitting photographs to be copied, enlarged, or colored.

(8) A real estate broker as defined in G.S. 93A-2. A real estate broker who is also

a real estate appraiser is required to obtain only one license under this section

to cover both activities.

(9) A real estate appraiser, as defined in G.S. 93E-1-4. A real estate appraiser who

is also a real estate broker is required to obtain only one license under this

section to cover both activities.

(10) A person who solicits or negotiates loans on real estate as agent for another

for a commission, brokerage, or other compensation.

(11) A mortician or embalmer licensed under G.S. 90-210.25.

(12) An individual licensed under Article 9F of Chapter 143 of the General

Statutes, the Home Inspector Licensure Act.

(b) The following persons are exempt from the tax:

(1) A person who is at least 75 years old.

(2) A person practicing the professional art of healing for a fee or reward, if the

person is an adherent of an established church or religious organization and

confines the healing practice to prayer or spiritual means.

(3) A blind person engaging in a trade or profession as a sole proprietor. A "blind

person" means any person who is totally blind or whose central visual acuity

does not exceed 20/200 in the better eye with correcting lenses, or where the

widest diameter of visual field subtends an angle no greater than 20 degrees.

This exemption shall not extend to any sole proprietor who permits more than

one person other than the proprietor to work regularly in connection with the

trade or profession for remuneration or recompense of any kind, unless the

other person in excess of one so remunerated is a blind person.

(c) Every person engaged in the public practice of accounting as a principal, or as a

manager of the business of public accountant, shall pay for such license fifty dollars ($50.00),

and in addition shall pay a license of twelve dollars and fifty cents ($12.50) for each person

employed who is engaged in the capacity of supervising or handling the work of auditing,

devising or installing systems of accounts.

(d) Repealed by Session Laws 1998-95, s. 7, effective July 1, 1999.

(e) Licenses issued under this section are issued as personal privilege licenses and shall

not be issued in the name of a firm or corporation. A licensed photographer having a located

place of business in this State is liable for a license tax on each agent or solicitor employed by

the photographer for soliciting business. If any person engages in more than one of the activities

for which a privilege tax is levied by this section, the person is liable for a privilege tax with

respect to each activity engaged in.

(f) Repealed by Session Laws 1981, c. 17.

(g) Repealed by Session Laws 1998-95, s. 7, effective July 1, 1999.

(h) Counties and cities may not levy any license tax on the business or professions taxed

under this section.

(i) Obtaining a license required by this Article does not of itself authorize the practice of

a profession, business, or trade for which a State qualification license is required. (1939, c. 158,

s. 109; 1941, c. 50, s. 3; 1943, c. 400, s. 2; 1949, c. 683; 1953, c. 1306; 1957, c. 1064; 1973, c.

476, s. 193; 1981, c. 17; c. 83, ss. 4, 5; 1989, c. 584, s. 7; 1991 (Reg. Sess., 1992), c. 974, s. 1;


1993, c. 419, s. 13.2; 1998-95, s. 7; 2002-158, s. 3; 2005-276, s. 23A.1(b); 2008-206, s. 1;

2009-445, s. 1; 2011-330, s. 6.)

§ 105-41.1. Repealed by Session Laws 1975, c. 619, s. 2, effective October 1, 1975.

§ 105-42: Repealed by Session Laws 1996, Second Extra Session, c. 14, s. 17.

§ 105-43. Repealed by Session Laws 1973, c. 1195, s. 8.

§ 105-44: Repealed by Session Laws 1981 (Regular Session, 1982), c. 1228.

§§ 105-45 through 46: Repealed by Session Laws 1996, Second Extra Session, c.14, s. 17.



§ 105-48.1: Repealed by Session Laws 1981, c. 7.

§ 105-49: Repealed by Session Laws 1989, c. 584, s. 10.



§ 105-51.1: Repealed by Session Laws 1996, Second Extra Session, c. 14, s. 17.



17.


§ 105-57: Repealed by Session Laws 1987 (Reg. Sess., 1988), c. 1081, s. 1.


§ 105-59: Repealed by Session Laws 1981 (Regular Session, 1982), c. 1282, s. 44.


17.

§ 105-61.1: Repealed by Session Laws 1989, c. 584, s. 17.






§§ 105-65 through 105-65.1: Repealed by Session Laws 1996, Second Extra Session, c. 14,

s.17.










§ 105-73. Repealed by Session Laws 1957, c. 1340, ss. 2, 9.


§ 105-75: Repealed by Session Laws 1979, 2nd Session, c. 1304, s. 1.










§ 105-83. Installment paper dealers.

(a) Every person engaged in the business of dealing in, buying, or discounting

installment paper, notes, bonds, contracts, or evidences of debt for which, at the time of or in

connection with the execution of the instruments, a lien is reserved or taken upon personal

property located in this State to secure the payment of the obligations, shall submit to the

Secretary quarterly no later than the twentieth day of January, April, July, and October of each

year, upon forms prescribed by the Secretary, a full, accurate, and complete statement, verified

by the officer, agent, or person making the statement, of the total face value of the obligations

dealt in, bought, or discounted within the preceding three calendar months and, at the same time,

shall pay a tax of two hundred seventy-seven thousandths of one percent (.277%) of the face

value of these obligations.

(b) Repealed by Session Laws 1998-95, s. 9.

(c) If any person deals in, buys, or discounts any obligations described in this section

without paying a tax imposed by this section, the person may not bring an action in a State court

to enforce collection of an obligation dealt in, bought, or discounted during the period of

noncompliance with this section until the person pays the amount of tax, penalties, and interest

due.

(d) This section does not apply to corporations liable for the tax levied under G.S.

105-102.3 or to savings and loan associations.

(e) Counties and cities shall not levy any license tax on the business taxed under this

section. (1939, c. 158, s. 148; 1957, c. 1340, s. 2; 1973, c. 476, s. 193; 1981, c. 83, ss. 8, 9; 1991,

c. 45, s. 3; 1991 (Reg. Sess., 1992), c. 965, s. 3; 1998-95, s. 9; 1998-98, s. 1(f).)



17.


§ 105-88. Loan agencies.

(a) Every person, firm, or corporation engaged in any of the following businesses must

pay for the privilege of engaging in that business an annual tax of two hundred fifty dollars

($250.00) for each location at which the business is conducted:

(1) The business of making loans or lending money, accepting liens on, or

contracts of assignments of, salaries or wages, or any part thereof, or other

security or evidence of debt for repayment of such loans in installment

payment or otherwise.

(2) The business of check cashing regulated under Article 22 of Chapter 53 of the

General Statutes.

(3) The business of pawnbroker regulated under Part 1 of Article 45 of Chapter

66 of the General Statutes.


(b) This section does not apply to banks, industrial banks, trust companies, savings and

loan associations, cooperative credit unions, the business of negotiating loans on real estate as

described in G.S. 105-41, or insurance premium finance companies licensed under Article 35 of

Chapter 58 of the General Statutes. This section applies to those persons or concerns operating

what are commonly known as loan companies or finance companies and whose business is as

hereinbefore described, and those persons, firms, or corporations pursuing the business of

lending money and taking as security for the payment of the loan and interest an assignment of

wages or an assignment of wages with power of attorney to collect the amount due, or other

order or chattel mortgage or bill of sale upon household or kitchen furniture. No real estate

mortgage broker is required to obtain a privilege license under this section merely because the

broker advances the broker's own funds and takes a security interest in real estate to secure the

advances and when, at the time of the advance, the broker has already made arrangements with

others for the sale or discount of the obligation at a later date and does so sell or discount the

obligation within the period specified in the arrangement or extensions thereof; or when, at the

time of the advance the broker intends to sell the obligation to others at a later date and does,

within 12 months from date of initial advance, make arrangements with others for the sale of the

obligation and does sell the obligation within the period specified in the arrangement or

extensions thereof; or because the broker advances the broker's own funds in temporary

financing directly involved in the production of permanent-type loans for sale to others; and no

real estate mortgage broker whose mortgage lending operations are essentially as described

above is required to obtain a privilege license under this section.

(c) At the time of making any such loan, the person, or officer of the firm or corporation

making the loan, shall give to the borrower in writing in convenient form a statement showing

the amount received by the borrower, the amount to be paid back by the borrower, the time in

which the amount is to be paid, and the rate of interest and discount agreed upon.

(d) A loan made by a person who does not comply with this section is not collectible at

law under G.S. 105-269.13.

(e) (Repealed effective July 1, 2015) Counties, cities, and towns may levy a license tax

on the business taxed under this section. Except as provided in G.S. 160A-211 and G.S.

153A-152, the tax may not exceed one hundred dollars ($100.00). (1939, c. 158, s. 152; 1967, c.

1080; c. 1232, s. 2; 1973, c. 476, s. 193; 1991, c. 45, s. 4; 1993, c. 539, s. 695; 1994, Ex. Sess., c.

24, s. 14(c); 1998-98, s. 1(g); 1999-438, s. 2; 2000-120, s. 3; 2000-173, s. 2; 2012-46, s. 25;

2014-3, s. 12.3(b).)


17.

§ 105-90.1: Repealed by Session Laws 1989 (Regular Session, 1990), c. 814, s. 4.









17.





§ 105-102.2: Repealed by Session Laws 1981 (Regular Session, 1982), c. 1213.

§ 105-102.3. (Repealed effective June 30, 2016) Banks.

There is imposed upon every bank or banking association, including each national banking

association, that is operating in this State as a commercial bank, an industrial bank, a savings

bank created other than under Chapter 54B or 54C of the General Statutes or the Home Owners'

Loan Act of 1933 (12 U.S.C. §§ 1461-68), a trust company, or any combination of such facilities

or services, and whether such bank or banking association, hereinafter to be referred to as a bank

or banks, is organized, under the laws of the United States or the laws of North Carolina, in the

corporate form or in some other form of business organization, an annual privilege tax. A report

and the privilege tax are due by the first day of July of each year on forms provided by the

Secretary. The tax rate is thirty dollars ($30.00) for each one million dollars ($1,000,000) or

fractional part thereof of total assets held as provided in this section. The assets upon which the

tax is levied shall be determined by averaging the total assets shown in the four quarterly call

reports of condition (consolidating domestic subsidiaries) for the preceding calendar year as

required by bank regulatory authorities. If a bank has been in operation less than a calendar year,

then the assets upon which the tax is levied shall be determined by multiplying the average of the

total assets by a fraction, the denominator of which is 365 and the numerator of which is the

number of days of operation. If a bank operates an international banking facility, as defined in

G.S. 105-130.5(b)(13), the assets upon which the tax is levied shall be reduced by the average

amount for the taxable year of all assets of the international banking facility which are employed

outside the United States, as computed pursuant to G.S. 105-130.5(b)(13)c. For an out-of-state

bank with one or more branches in this State, or for an in-state bank with one or more branches

outside this State, the assets of the out-of-state bank or of the in-state bank upon which the tax is

levied shall be reduced by the average amount for the taxable year of all assets of the out-of-state

bank or of the in-state bank which are employed outside this State. The tax imposed in this

section shall be for the privilege of carrying on the businesses herein defined on a statewide basis

regardless of the number of places or locations of business within the State. Counties and cities

may not levy a license or privilege tax on the businesses taxed under this section, nor on the

business of an international banking facility as defined in subsection (b)(13) of G.S. 105-130.5.


(1973, c. 1053, s. 7; 1981, c. 855, s. 2; 1985 (Reg. Sess., 1986), c. 985, s. 4; 1995, c. 322, s. 2;

1998-95, s. 10; 1998-98, s. 1(h); 2015-241, s. 32.13(g); 2015-268, s. 10.1(h).)



§ 105-102.6: Repealed by Session Laws 2015-286, s. 4.11(a), effective October 22, 2015.

§ 105-103. Unlawful to operate without license.

When a license tax is required by law, and whenever the General Assembly shall levy a

license tax on any business, trade, employment, or profession, or for doing any act, it shall be

unlawful for any person, firm, or corporation without a license to engage in such business, trade,

employment, profession, or do the act; and when such tax is imposed it shall be lawful to grant a

license for the business, trade, employment, or for doing the act; and no person, firm, or

corporation shall be allowed the privilege of exercising any business, trade, employment,

profession, or the doing of any act taxed in this schedule throughout the State under one license,

except under a statewide license. (1939, c. 158, s. 181; 1998-98, s. 41.)

§ 105-104: Repealed by Session Laws 2007-491, s. 2, effective January 1, 2008.

§ 105-105. Persons, firms, and corporations engaged in more than one business to pay tax

on each.

Where any person, firm, or corporation is engaged in more than one business, trade,

employment, or profession which is made under the provisions of this Article subject to State

license taxes, such persons, firms, or corporations shall pay the license tax prescribed in this

Article for each separate business, trade, employment, or profession. (1939, c. 158, s. 183.)

§ 105-106. Effect of change in name of firm.

No change in the name of a firm, partnership, or corporation, nor the taking in of a new

partner, nor the withdrawal of one or more of the firm, shall be considered as commencing

business; but if any one or more of the partners remain in the firm, or if there is change in

ownership of less than a majority of the stock, if a corporation, the business shall be regarded as

continuing. (1939, c. 158, s. 184.)

§ 105-107: Repealed by Session Laws 1998-95, s. 12, effective July 1, 1999.

§ 105-108. Property used in a licensed business not exempt from taxation.

A State license, issued under any of the provisions of this Article shall not be construed to

exempt from other forms of taxation the property employed in such licensed business, trade,

employment, or profession. (1939, c. 158, s. 186.)

§ 105-109. Obtaining license and paying tax.

(a) Repealed by Session Laws 1998-95, s. 13, effective July 1, 1999.

(b) License Required. – Before a person may engage in a business, trade, or profession

for which a license is required under this Article, the person must be licensed by the Department.


To obtain a license, a person must submit an application to the Department for the license and

pay the required tax. An application for a license is considered a return.

The Department must issue a license to a person who files a completed application and pays

the required tax. A license must be displayed conspicuously at the location of the licensed

business, trade, or profession.

(c) Repealed by Session Laws 1998-212, s. 29A.14(a), effective January 1, 1999.

(d) Penalties. – The penalties in G.S. 105-236 apply to this Article. The Secretary may

collect a tax due under this Article in any manner allowed under Article 9 of this Chapter.

(e) (Repealed effective July 1, 2015) Local License Taxes. – The penalty and collection

provisions of this section apply to taxes levied by counties of the State under the authority of this

Article in the same manner and to the same extent as they apply to taxes levied by the State. The

provisions of this section for the collection of delinquent license taxes apply to license taxes

levied by the cities and towns of this State under authority of this Article, or any other provision

of law, in the same manner and to the same extent as they apply to taxes levied by the State.

(1939, c. 158, s. 187; 1957, c. 859; 1963, c. 294, s. 5; 1973, c. 108, s. 51; c. 476, s. 193; 1993, c.

539, ss. 698, 699; 1994, Ex. Sess., c. 24, s. 14(c); 1998-95, s. 13; 1998-212, s. 29A.14(a);

2007-491, s. 7; 2014-3, s. 12.3(b).)

§ 105-109.1. Repealed by Session Laws 1999-337, s. 16..

§ 105-110: Repealed by Session Laws 1998-212, s. 29A.14(b).

§ 105-111: Repealed by Session Laws 2001-414, s. 2.

§ 105-112: Repealed by Session Laws 1998-212, s. 29A.14(c).

§ 105-113. Repealed by Session Laws 1999-337, s. 17.

§ 105-113.1: Deleted.

Article 2A.

Tobacco Products Tax.

Part 1. General Provisions.

§ 105-113.2. Short title.

This Article may be cited as the "Tobacco Products Tax Act" or "Tobacco Products Tax

Article." (1969, c. 1075, s. 2; 1991, c. 689, s. 266; 1998-98, s. 56.)

§ 105-113.3. Scope of tax; administration.

(a) Scope. – The taxes imposed by this Article shall be collected only once on the same

tobacco product. Except as permitted by Article 2 of this Chapter, a city or county may not levy a

privilege license tax on the sale of tobacco products.

(b) Administration. – Article 9 of this Chapter applies to this Article. (1969, c. 1075, s. 2;

1991, c. 689, s. 268; 1998-212, s. 29A.14(d).)




(1) Affiliate. – A person who directly or indirectly controls, is controlled by, or is

under common control with another person.

(1a) Affiliated manufacturer. – A manufacturer licensed under G.S. 105-113.12

who is an affiliate of a manufacturer licensed under G.S. 105-113.12.

(1b) Cigar. – A roll of tobacco wrapped in a substance that contains tobacco, other

than a cigarette.

(1c) Cigarette. – Any of the following:

a. A roll of tobacco wrapped in paper or in a substance that does not

contain tobacco.

b. A roll of tobacco wrapped in a substance that contains tobacco and

that, because of its appearance, the type of tobacco used in the filler, or

its packaging and labeling, is likely to be offered to or purchased by a

consumer as a cigarette described in subpart a. of this subdivision.

(1k) (Effective June 1, 2015) Consumable product. – Any nicotine liquid solution

or other material containing nicotine that is depleted as a vapor product is

used.

(2) Cost price. – The price a person liable for the tax on tobacco products

imposed by Part 3 of this Article paid for the products, before any discount,

rebate, or allowance or the tax imposed by that Part.

(3) Distributor. – Either of the following:

a. A person, wherever resident or located, who purchases non-tax-paid

cigarettes directly from the manufacturer of the cigarettes and stores,

sells, or otherwise disposes of the cigarettes.

b. A manufacturer of cigarettes.

(4) Repealed by Session Laws 1991, c. 689, s. 267.

(4a) Integrated wholesale dealer. – A wholesale dealer who is an affiliate of a

manufacturer of tobacco products, other than cigarettes, and is not a retail

dealer.

(5) Licensed distributor. – A distributor licensed under Part 2 of this Article.

(6) Manufacturer. – A person who produces tobacco products or a person who

contracts with another person to produce tobacco products and is the exclusive

purchaser of the products under the contract.

(7) Package. – The individual packet, can, box, or other container used to contain

and to convey tobacco products to the consumer.


(9) Retail dealer. – A person who sells a tobacco product to the ultimate consumer

of the product.

(10) Sale. – A transfer, a trade, an exchange, or a barter, in any manner or by any

means, with or without consideration.

(10a) Secretary. – The Secretary of Revenue.

(11) Repealed by Session Laws 1993, c. 442, s. 1, effective January 1, 1994.

(11a) (Effective until June 1, 2015) Tobacco product. – A cigarette, a cigar, or any

other product that contains tobacco and is intended for inhalation or oral use.


(11a) (Effective June 1, 2015) Tobacco product. – A cigarette, a cigar, or any other

product that contains tobacco and is intended for inhalation or oral use. The

term includes a vapor product.


(13) Use. – The exercise of any right or power over cigarettes, incident to the

ownership or possession thereof, other than the making of a sale thereof in the

course of engaging in a business of selling cigarettes. The term includes the

keeping or retention of cigarettes for use.

(13a) (Effective June 1, 2015) Vapor product. – Any nonlighted, noncombustible

product that employs a mechanical heating element, battery, or electronic

circuit regardless of shape or size and that can be used to produce vapor from

nicotine in a solution. The term includes any vapor cartridge or other

container of nicotine in a solution or other form that is intended to be used

with or in an electronic cigarette, electronic cigar, electronic cigarillo,

electronic pipe, or similar product or device. The term does not include any

product regulated by the United States Food and Drug Administration under

Chapter V of the federal Food, Drug, and Cosmetic Act.

(14) Wholesale dealer. – Either of the following:

a. A person who acquires tobacco products other than cigarettes for sale

to another wholesale dealer or to a retail dealer.

b. A manufacturer of tobacco products other than cigarettes. (1969, c.

1075, s. 2; 1973, c. 476, s. 193; 1991, c. 689, s. 267; 1993, c. 354, s. 7;

c. 442, s. 1; 2007-435, s. 2; 2009-559, s. 1; 2011-330, s. 2(a); 2014-3,

s. 15.1(a).)

§ 105-113.4A. Licenses.

(a) General. – To obtain a license required by this Article, an applicant must file an

application with the Secretary on a form provided by the Secretary and pay the tax due for the

license. An application must include the applicant's name, address, federal employer

identification number, and any other information required by the Secretary. A license is not

transferable or assignable and must be displayed at the place of business for which it is issued.

(b) Requirements. – An applicant for a license must meet the following requirements:

(1) If the applicant is a corporation, the applicant must either be incorporated in

this State or be authorized to transact business in this State.

(2) If the applicant for a license is a limited liability company, the applicant must

either be organized in this State or be authorized to transact business in this

State.

(3) If the applicant for a license is a limited partnership, the applicant must either

be formed in this State or be authorized to transact business in this State.

(4) If the applicant for a license is an individual or a general partnership, the

applicant must designate an agent for service of process and give the agent's

name and address.

(c) Denial. – The Secretary may investigate an applicant for a license required under this

Article to determine if the information the applicant submits with the application is accurate and

if the applicant is eligible to be licensed under this Article. The Secretary may refuse to issue a

license to an applicant that has done any of the following:


(1) Submitted false or misleading information on its application.

(2) Had a license issued under this Article cancelled by the Secretary for cause.

(3) Had a tobacco products license or registration issued by another state

cancelled for cause.

(4) Been convicted of fraud or misrepresentation.

(5) Been convicted of any other offense that indicates the applicant may not

comply with this Article if issued a license.

(6) Failed to remit payment for a tax debt under this Chapter. The term "tax debt"

has the same meaning as defined in G.S. 105-243.1.

(7) Failed to file a return due under this Chapter.

(d) Refund. – A refund of a license tax is allowed only when the tax was collected or paid

in error. No refund is allowed when a license holder surrenders a license or the Secretary revokes

a license.

(e) Duplicate or Amended License. – Upon application to the Secretary, a license holder

may obtain without charge a duplicate or amended license as provided in this subsection. A

duplicate or amended license must state that it is a duplicate or amended license, as appropriate:

(1) A duplicate license, if the license holder establishes that the original license

has been lost, destroyed, or defaced.

(2) An amended license, if the license holder establishes that the location of the

place of business for which the license was issued has changed.

(f) Information on License. – The Secretary must include the following information on

each license required by this Article:

(1) The legal name of the license holder.

(2) The name under which the license holder conducts business.

(3) The physical address of the place of business of the license holder.

(4) The account number assigned to the license by the Department.

(g) Records. – The Secretary must keep a record of the following:

(1) Applicants for a license under this Article.

(2) Persons to whom a license has been issued under this Article.

(3) Persons that hold a current license issued under this Article, by license

category.

(h) Lists. – The Secretary must provide the list required under subsection (g) of this

section upon request of a manufacturer that is a license holder under this Article. The list must

state the name, account number, and business address of each license holder on the list. (1991

(Reg. Sess., 1992), c. 955, s. 3; 2013-414, s. 22(a).)

§ 105-113.4B. Reasons why the Secretary can cancel a license.

(a) Reasons. – The Secretary may cancel a license issued under this Article upon the

written request of the license holder. The Secretary may summarily cancel the license of a

license holder when the Secretary finds that the license holder is incurring liability for the tax

imposed under this Article after failing to pay a tax when due under this Article. In addition, the

Secretary may cancel the license of a license holder that commits one or more of the following

acts after holding a hearing on whether the license should be cancelled:

(1) Fails to obtain a license required by this Article.

(2) Willfully fails to file a return required by this Article.

(3) Willfully fails to pay a tax when due under this Article.


(4) Makes a false statement in an application or return required under this Article.

(5) Fails to keep records as required by this Article.

(6) Refuses to allow the Secretary or a representative of the Secretary to examine

the person's books, accounts, and records concerning tobacco product.

(7) Fails to disclose the correct amount of tobacco product taxable in this State.

(8) Fails to file a replacement bond or an additional bond if required by the

Secretary under this Article.

(9) Violates G.S. 14-401.18.

(b) Procedure. – The Secretary must send a person whose license is summarily cancelled

a notice of the cancellation and must give the person an opportunity to have a hearing on the

cancellation within 10 days after the cancellation. The Secretary must give a person whose

license may be cancelled after a hearing at least 10 days' written notice of the date, time, and

place of the hearing. A notice of a summary license cancellation and a notice of hearing must be

sent by registered mail to the last known address of the license holder.

(c) Release of Bond. – When the Secretary cancels a license and the license holder has

paid all taxes and penalties due under this Article, the Secretary must take one of the following

actions concerning a bond or an irrevocable letter of credit filed by the license holder:

(1) Return an irrevocable letter of credit to the license holder.

(2) Return a bond to the license holder or notify the person liable on the bond and

the license holder that the person is released from liability on the bond.

(1999-333, s. 6; 2013-414, s. 22(b).)

§ 105-113.4C. Enforcement of Master Settlement Agreement Provisions.

The Master Settlement Agreement between the states and the tobacco product manufacturers,

incorporated by reference into the consent decree referred to in S.L. 1999-2, requires each state

to diligently enforce Article 37 of Chapter 66 of the General Statutes. The Office of the Attorney

General and the Secretary of Revenue shall perform the following responsibilities in enforcing

Article 37:

(1) The Office of the Attorney General must give to the Secretary of Revenue a

list of the nonparticipating manufacturers under the Master Settlement

Agreement and the brand names of the products of the nonparticipating

manufacturers.

(2) The Office of the Attorney General must update the list provided under

subdivision (1) of this section when a nonparticipating manufacturer becomes

a participating manufacturer, another nonparticipating manufacturer is

identified, or more brands or products of nonparticipating manufacturers are

identified.

(3) The Secretary of Revenue must require the taxpayers of the tobacco excise tax

to identify the amount of tobacco products of nonparticipating manufacturers

sold by the taxpayers, and may impose this requirement as provided in G.S.

66-290(10).

(4) The Secretary of Revenue must determine the amount of State tobacco excise

taxes attributable to the products of nonparticipating manufacturers, based on

the information provided by the taxpayers, and must report this information to

the Office of the Attorney General. (1999-311, s. 2.)


§ 105-113.4D. Tax with respect to inventory on effective date of tax increase.

Every person subject to the taxes levied in this Article who, on the effective date of a tax

increase under this Article, has on hand any tobacco products must file a complete inventory of

the tobacco products within 20 days after the effective date of the increase, and must pay an

additional tax to the Secretary when filing the inventory. The amount of tax due is the amount

due based on the difference between the former tax rate and the increased tax rate. (1969, c.

1075, s. 2; 1973, c. 476, s. 193; 1991, c. 689, s. 263; 2009-451, s. 27A.5(b).)

Part 2. Cigarette Tax.

§ 105-113.5. Tax on cigarettes.

A tax is levied on the sale or possession for sale in this State, by a distributor, of all cigarettes

at the rate of two and one-fourth cents (2.25¢) per individual cigarette. (1969, c. 1075, s. 2; c.

1246, s. 1; 1991, c. 689, s. 262; 2004-170, s. 5; 2005-276, s. 34.1(a), (b); 2009-451, s. 27A.5(a).)

§ 105-113.6. Use tax levied.

A tax is levied upon the sale or possession for sale by a person other than a distributor, and

upon the use, consumption, and possession for use or consumption of cigarettes within this State

at the rate set in G.S. 105-113.5. This tax does not apply, however, to cigarettes upon which the

tax levied in G.S. 105-113.5 has been paid. (1969, c. 1075, s. 2; 1993, c. 442, s. 2.)

§ 105-113.7: Recodified as G.S. 105-113.4D by Session Laws 2009-451, s. 27A.5(b), effective

September 1, 2009.

§ 105-113.8. Federal Constitution and statutes.

Any activities which this Article may purport to tax in violation of the Constitution of the

United States or any federal statute are hereby expressly exempted from taxation under this

Article. (1969, c. 1075, s. 2.)

§ 105-113.9. Out-of-state shipments.

Any distributor engaged in interstate business shall be permitted to set aside part of the stock

as necessary to conduct interstate business without paying the tax otherwise required by this Part,

but only if the distributor complies with the requirements prescribed by the Secretary concerning

keeping of records, making of reports, posting of bond, and other matters for administration of

this Part.

"Interstate business" as used in this section means:

(1) The sale of cigarettes to a nonresident where the cigarettes are delivered by

the distributor to the business location of the nonresident purchaser in another

state; and

(2) The sale of cigarettes to a nonresident wholesaler or retailer registered through

the Secretary who has no place of business in North Carolina and who

purchases the cigarettes for the purposes of resale not within this State and

where the cigarettes are delivered to the purchaser at the business location in

North Carolina of the distributor who is also licensed as a distributor under the

laws of the state of the nonresident purchaser. (1969, c. 1075, s. 2; 1973, c.

476, s. 193; 1977, c. 874; 1993, c. 442, s. 3.)


§ 105-113.10. Manufacturers exempt from paying tax.

(a) Shipping to Other Distributors. – Any manufacturer shipping cigarettes to other

distributors who are licensed under G.S. 105-113.12 may, upon application to the Secretary and

upon compliance with requirements prescribed by the Secretary, be relieved of paying the taxes

levied in this Part. No manufacturer may be relieved of the requirement to be licensed as a

distributor in order to make shipments, including drop shipments, to a retail dealer or ultimate

user.

(b) Shipping for Affiliated Manufacturer. – A manufacturer may, upon application to the

Secretary and upon compliance with requirements prescribed by the Secretary, be relieved of

paying the taxes levied in this Part on cigarettes that are manufactured by an affiliated

manufacturer and temporarily stored at and shipped from its facilities. (1969, c. 1075, s. 2; c.

1246, s. 2; 1973, c. 476, s. 193; 1975, c. 275, s. 2; 1993, c. 442, s. 4; 2011-330, s. 2(b).)

§ 105-113.11. Licenses required.

After the effective date of this Article, no person shall engage in business as a distributor in

this State, without having first obtained from the Secretary the appropriate license for that

purpose as prescribed herein. Any license required by this Article shall be in addition to any and

all other licenses which may be required by law. (1969, c. 1075, s. 2; 1973, c. 476, s. 193.)

§ 105-113.12. Distributor must obtain license.

(a) A distributor shall obtain for each place of business a continuing distributor's license

and shall pay a tax of twenty-five dollars ($25.00) for the license.

(b) For the purposes of this section, a "place of business" is a place where a distributor

receives or stores non-tax-paid cigarettes.

(c) An out-of-state distributor may obtain a distributor's license upon compliance with

the provisions of G.S. 105-113.24 and payment of a tax of twenty-five dollars ($25.00). (1969, c.

1075, s. 2; 1991 (Reg. Sess., 1992), c. 955, s. 4; 1993, c. 442, s. 5.)

§ 105-113.13. Secretary may require a bond or irrevocable letter of credit.

(a) Repealed by Session Laws 2013-414, s. 22(c), effective September 1, 2013.

(b) The Secretary may require a distributor to furnish a bond in an amount that

adequately protects the State from loss if the distributor fails to pay taxes due under this Part. A

bond must be conditioned on compliance with this Part, payable to the State, and in the form

required by the Secretary. The Secretary must set the bond amount based on the anticipated tax

liability of the distributor. The Secretary should periodically review the sufficiency of bonds

required of the distributor and increase the required bond amount if the amount no longer covers

the anticipated tax liability of the distributor and decrease the amount if the Secretary finds that a

lower bond amount will protect the State adequately from loss.

For purposes of this section, a distributor may substitute an irrevocable letter of credit for the

secured bond required by this section. The letter of credit must be issued by a commercial bank

acceptable to the Secretary and available to the State as a beneficiary. The letter of credit must be

in a form acceptable to the Secretary, conditioned upon compliance with this Article, and in the

amounts stipulated in this section. (1969, c. 1075, s. 2; 1973, c. 476, s. 193; 1991 (Reg. Sess.,

1992), c. 955, s. 5; 1993, c. 442, s. 6; 2013-414, s. 22(c); 2014-3, s. 9.1(a).)


§§ 105-113.14 through 105-113.15: Repealed by Session Laws 1991 (Regular Session,

1992), c. 955, s. 6, effective July 15, 1992.

§ 105-113.16. Repealed by Session Laws 1999-333, s. 7.

§ 105-113.17. Identification of dispensers.

Each vending machine that dispenses cigarettes must be marked to identify its owner in the

manner required by the Secretary. (1969, c. 1075, s. 2; 1973, c. 476, s. 193; 1991 (Reg. Sess.,

1992), c. 955, s. 8.)

§ 105-113.18. Payment of tax; reports.

The taxes levied in this Part are payable when a report is required to be filed. The following

reports are required to be filed with the Secretary:

(1) Distributor's Report. – A distributor shall file a monthly report in the form

prescribed by the Secretary. The report covers sales and other activities

occurring in a calendar month and is due within 20 days after the end of the

month covered by the report. The report shall state the amount of tax due and

shall identify any transactions to which the tax does not apply.

(1a) Report of Free Cigarettes. – A manufacturer who distributes cigarettes without

charge shall file a monthly report in the form prescribed by the Secretary. The

report covers cigarettes distributed without charge in a calendar month and is

due within 20 days after the end of the month covered by the report. The

report shall state the number of cigarettes distributed without charge and the

amount of tax due.

(2) Use Tax Report. – Every other person who has acquired non-tax-paid

cigarettes for sale, use, or consumption subject to the tax imposed by this Part

shall, within 96 hours after receipt of the cigarettes, file a report in the form

prescribed by the Secretary showing the amount of cigarettes so received and

any other information required by the Secretary. The report shall be

accompanied by payment of the full amount of the tax.

(3) Shipping Report. – Any person, except a licensed distributor, who transports

cigarettes upon the public highways, roads, or streets of this State, upon notice

from the Secretary, shall file a report in the form prescribed by the Secretary

and containing the information required by the Secretary.

(4) Repealed by Session Laws 1981 (Regular Session, 1982), c. 1209, s. 1. (1969,

c. 1075, s. 2; 1973, c. 476, s. 193; 1981 (Reg. Sess., 1982), c. 1209, s. 1; 1993,

c. 442, s. 7; 1993 (Reg. Sess., 1994), c. 745, s. 2.)

§§ 105-113.19 through 105-113.20: Repealed by Session Laws 1993, c. 442, s. 8.

§ 105-113.21. Discount; refund.

(a) Repealed by Session Laws 2003-284, s. 45A.1(a), effective for reporting periods

beginning on or after August 1, 2003.

(a1) Discount. – A distributor who files a timely report under G.S. 105-113.18 and who

sends a timely payment may deduct from the amount due with the report a discount of two


percent (2%). This discount covers expenses incurred in preparing the records and reports

required by this Part, and the expense of furnishing a bond.

(b) Refund. – A distributor in possession of packages of stale or otherwise unsalable

cigarettes upon which the tax has been paid may return the cigarettes to the manufacturer as

provided in this subsection and apply to the Secretary for refund of the tax. The application shall

be in the form prescribed by the Secretary and shall be accompanied by an affidavit from the

manufacturer stating the number of cigarettes returned to the manufacturer by the applicant. The

Secretary shall refund the tax paid, less the discount allowed, on the unsalable cigarettes. The

distributor must return the cigarettes to the manufacturer of the cigarettes or to the affiliated

manufacturer who is contracted by the manufacturer of the cigarettes to serve as the

manufacturer's agent for the purposes of validating quantities and disposing of unsalable

cigarettes. (1969, c. 1075, s. 2; cc. 1222, 1238; 1973, c. 476, s. 193; 1993, c. 442, s. 9; 2001-414,

s. 3; 2003-284, s. 45A.1(a); 2004-84, s. 2(a); 2011-330, s. 2(c).)


§ 105-113.24. Out-of-State distributors to register and remit tax.

(a) The Secretary may authorize any distributor outside this State engaged in the business

of selling and shipping cigarettes into the State to obtain a license and report and pay taxes

required by this Part.

(b) A nonresident distributor must agree to submit the distributor's books, accounts, and

records to reasonable examination by the Secretary or the Secretary's duly authorized agents. The

Secretary may require a nonresident distributor to file a bond in accordance with G.S.

105-113.13.

(c) Each such nonresident distributor, other than a foreign corporation which has

qualified with the Secretary of State as doing business in this State shall, by a duly executed

instrument filed in the office of the Secretary of State, constitute and appoint the Secretary of

State his lawful attorney in fact upon whom any original process in any action or legal

proceeding against such nonresident distributor arising out of any matter relating to this Article

may be served, and therein agree that any original process against him so served shall be of the

same force and effect as if served on him within this State, and that the authority thereof shall

continue in force irrevocably so long as any such nonresident distributor shall remain liable for

any taxes, interest and penalties under this Article.

(d) Any nonresident distributor who shall comply with the provisions of this section may

be licensed as a distributor. (1969, c. 1075, s. 2; 1973, c. 476, s. 193; 1991 (Reg. Sess., 1992), c.

955, s. 9; 1993, c. 442, ss. 9.1(a), 9.1(b).)


§ 105-113.26. Records to be kept.

Every person required to be licensed under this Article and every person required to make

reports under this Article shall keep complete and accurate records of all sales and other

information as required under this Article. The records shall be in the form prescribed by the

Secretary.

These records shall be safely preserved for a period of three years in a manner to ensure their

security and accessibility for inspection by the Department. The Secretary may consent to the


destruction of any records at any time within this three-year period. (1969, c. 1075, s. 2; 1973, c.

476, s. 193; 1993, c. 442, s. 10.)

§ 105-113.27. Non-tax-paid cigarettes.

(a) Except as otherwise provided in this Article, licensed distributors shall not sell,

borrow, loan, or exchange non-tax-paid cigarettes to, from, or with other licensed distributors.

(b) No person shall sell or offer for sale non-tax-paid cigarettes.

(c) The possession of more than six hundred cigarettes on which tax has been paid to

another state or country, by any person other than a licensed distributor, is prima facie evidence

that the cigarettes are possessed in violation of this Part. (1969, c. 1075, s. 2; 1993, c. 442, s. 11;

1999-337, s. 18.)


§ 105-113.29. Unlicensed place of business.

It shall be unlawful for any person to maintain a place of business within this State required

by this Article to be licensed to engaged in the business of selling or offering for sale cigarettes

without first obtaining such licenses. (1969, c. 1075, s. 2.)

§ 105-113.30. Records and reports.

It shall be unlawful for any person who is required under the provisions of this Article to

keep records or make reports, to fail to keep such records, refuse to keep such reports, make false

entries in such records, fail to produce such records for inspection by the Secretary or his duly

authorized agents, fail to file a report, or make a false or fraudulent report or statement. (1969, c.

1075, s. 2; 1973, c. 476, s. 193.)

§ 105-113.31. Possession and transportation of non-tax-paid cigarettes; seizure and

confiscation of vehicle or vessel.

(a) It shall be unlawful for any person to transport non-tax-paid cigarettes in violation of

this Part. The Secretary may adopt rules allowing quantities of non-tax-paid cigarettes, not

exceeding six hundred, to be brought into this State by a transient, a tourist, or a person returning

to this State after traveling outside this State, for their own use. The possession or transportation

of these cigarettes is not subject to the penalties imposed by this section.

(b) (1) Every person who transports non-tax-paid cigarettes on the public highways,

roads, streets, or waterways of this State must transport with the cigarettes

invoices or delivery tickets for the cigarettes showing the true name and

complete and exact address of the consignee or purchaser, the quantity and

brands of the cigarettes transported, and the true name and complete and exact

address of the person who has paid or who will pay the tax imposed by this

Part or the tax, if any, of the state or foreign country at the point of ultimate

destination.

(2) A common carrier that has issued a bill of lading for a shipment of cigarettes

and is without notice to itself or to any of its agents or employees that the

cigarettes are non-tax-paid in violation of this Part is considered to have

complied with this Part and the vehicle or vessel in which the cigarettes are

being transported is not subject to confiscation under this section. In the


absence of the required invoices, delivery tickets, or bills of lading, the

cigarettes so transported, the vehicle or vessel in which the cigarettes are

being transported, and any paraphernalia or devices used in connection with

the non-tax-paid cigarettes are declared to be contraband goods and may be

seized by any officer of the law, who shall take possession of the vehicle or

vessel and cigarettes and shall arrest any person in charge of the vehicle or

vessel and cigarettes.

(3) The officer shall at once proceed against the person arrested, under the

provisions of this Part, in any court having competent jurisdiction; but the

vehicle or vessel shall be returned to the owner upon execution by the owner

of a good and valid bond, with sufficient sureties, in a sum double the value of

the property, which bond shall be approved by the officer and shall be

conditioned to return the property to the custody of the officer on the day of

trial to abide the judgment of the court. All non-tax-paid cigarettes seized

under this section shall be held and shall, upon the acquittal of the person so

charged, be returned to the established owner.

(4) Unless the claimant can show that the non-tax-paid cigarettes seized were not

transported in violation of this Part and that the property seized belongs to the

claimant or that in the case of property other than cigarettes, the property was

used in transporting non-tax-paid cigarettes in violation of this Part without

the claimant's knowledge or consent, with the right on the part of the claimant

to have a jury pass upon this claim, the court shall order a sale by public

auction of the property seized, and the officer making the sale, after deducting

the cost of the tax due, which the officer shall pay upon sale, expenses of

keeping the property, the fee for the seizure, and the costs of the sale, shall

pay all liens according to their priorities, which are established, by

intervention or otherwise, at the hearing or in another proceeding brought for

the purpose as being bona fide and as having been created without the lien or

having any notice that the vehicle or vessel was being used for the unlawful

transportation of non-tax-paid cigarettes, and shall pay the balance of the

proceeds to the State Treasurer for the General Fund.

(5) All liens against property sold under the provisions of this section shall be

transferred from the property to the proceeds of the sale of the property. If,

however, no one is found claiming the cigarettes, or the vehicle or vessel, then

the taking of the cigarettes, vehicle, or vessel, along with a description, shall

be advertised in a newspaper having circulation in the county where the items

were taken, once a week for two weeks and by notices posted in three public

places near the place of seizure, and if no claimant appears within ten days

after the last publication of the advertisement, the property shall be sold, and

the proceeds, after deducting the expenses and costs, shall be paid to the State

Treasurer for the General Fund.

(6) This section does not authorize an officer to search any vehicle or vessel or

baggage of any person without a search warrant duly issued, except where the

officer has knowledge that there are non-tax-paid cigarettes in the vehicle or

vessel. (1969, c. 1075, s. 2; 1973, c. 476, s. 193; 1993, c. 442, s. 12.)


§ 105-113.32. Non-tax-paid cigarettes subject to confiscation.

All non-tax-paid cigarettes subject to the tax imposed by this Part, together with any

container in which they are stored or displayed for sale (including but not limited to vending

machines), are declared to be contraband goods and may be seized by any officer of the law.

The officer shall arrest any person in charge of the contraband goods and shall at once proceed

against the person arrested, under the provisions of this Part, in any court having competent

jurisdiction. The disposition of the seized cigarettes and container shall be governed by the

provisions of G.S. 105-113.31. (1969, c. 1075, s. 2; 1993, c. 442, s. 13.)

§ 105-113.33. Criminal penalties.

Any person who violates any of the provisions of this Article for which no other punishment

is specifically prescribed shall be guilty of a Class 1 misdemeanor. (1969, c. 1075, s. 2; 1993, c.

539, s. 700; 1994, Ex. Sess., c. 24, s. 14(c).)


Part 3. Tax on Other Tobacco Products.

§ 105-113.35. Tax on tobacco products other than cigarettes.

(a) Tax on Tobacco Products. – An excise tax is levied on tobacco products other than

cigarettes and vapor products at the rate of twelve and eight-tenths percent (12.8%) of the cost

price of the products.

(a1) Tax on Vapor Products. – An excise tax is levied on vapor products at the rate of five

cents (5¢) per fluid milliliter of consumable product. All invoices for vapor products issued by

manufacturers must state the amount of consumable product in milliliters.

(a2) Limitation. – The taxes imposed under this section do not apply to the following:

(1) A tobacco product sold outside the State.

(2) A tobacco product sold to the federal government.

(3) A sample tobacco product distributed without charge.

(b) Primary Liability. – The wholesale dealer or retail dealer who first acquires or

otherwise handles tobacco products subject to the tax imposed by this section is liable for the tax

imposed by this section. A wholesale dealer or retail dealer who brings into this State a tobacco

product made outside the State is the first person to handle the tobacco product in this State. A

wholesale dealer or retail dealer who is the original consignee of a tobacco product that is made

outside the State and is shipped into the State is the first person to handle the tobacco product in

this State.

(c) Secondary Liability. – A retail dealer who acquires non-tax-paid tobacco products

subject to the tax imposed by this section from a wholesale dealer is liable for any tax due on the

tobacco products. A retail dealer who is liable for tax under this subsection may not deduct a

discount from the amount of tax due when reporting the tax.

(d) Manufacturer's Option. – A manufacturer who is not a retail dealer and who ships

tobacco products other than cigarettes to either a wholesale dealer or retail dealer licensed under

this Part may apply to the Secretary to be relieved of paying the tax imposed by this section on

the tobacco products. A manufacturer who ships vapor products to either a wholesale dealer or

retail dealer licensed under this Part may apply to the Secretary to be relieved of paying the tax

imposed by this section on the vapor products shipped to either a wholesale dealer or retail

dealer. Once granted permission, a manufacturer may choose not to pay the tax until otherwise


notified by the Secretary. To be relieved of payment of the tax imposed by this section, a

manufacturer must comply with the requirements set by the Secretary.

Permission granted under this subsection to a manufacturer to be relieved of paying the tax

imposed by this section applies to an integrated wholesale dealer with whom the manufacturer is

an affiliate. A manufacturer must notify the Secretary of any integrated wholesale dealer with

whom it is an affiliate when the manufacturer applies to the Secretary for permission to be

relieved of paying the tax and when an integrated wholesale dealer becomes an affiliate of the

manufacturer after the Secretary has given the manufacturer permission to be relieved of paying

the tax.

If a person is both a manufacturer of cigarettes and a wholesale dealer of tobacco products

other than cigarettes and the person is granted permission under G.S. 105-113.10 to be relieved

of paying the cigarette excise tax, the permission applies to the tax imposed by this section on

tobacco products other than cigarettes. A cigarette manufacturer who becomes a wholesale

dealer after receiving permission to be relieved of the cigarette excise tax must notify the

Secretary of the permission received under G.S. 105-113.10 when applying for a license as a

wholesale dealer.

(d1) Limitation. – Except as otherwise provided in this Article, integrated wholesale

dealers may not sell, borrow, loan, or exchange non-tax-paid tobacco products other than

cigarettes to, from, or with other integrated wholesale dealers.

(e) Repealed by Session Laws 2009-451, s. 27A.5(c), effective September 1, 2009.

(1969, c. 1075, s. 2; 1977, c. 1114, s. 4; 1991, c. 689, s. 269; 1991 (Reg. Sess., 1992), c. 955, s.

10; 2003-284, s. 45A.1(b); 2004-84, s. 2(b); 2005-276, s. 34.1(c); 2007-323, s. 6.23(a);

2007-435, s. 3; 2009-451, s. 27A.5(c); 2009-559, s. 2; 2014-3, s. 15.1(b); 2015-6, s. 2.5(a).)

§ 105-113.36. Wholesale dealer and retail dealer must obtain license.

A wholesale dealer shall obtain for each place of business a continuing tobacco products

license and shall pay a tax of twenty-five dollars ($25.00) for the license. A retail dealer shall

obtain for each place of business a continuing tobacco products license and shall pay a tax of ten

dollars ($10.00) for the license. A "place of business" is a place where a wholesale dealer or

where a retail dealer makes tobacco products other than cigarettes or a wholesale dealer or a

retail dealer receives or stores non-tax-paid tobacco products other than cigarettes. (1969, c.

1075, s. 2; 1973, c. 476, s. 193; 1991, c. 689, s. 270; 1991 (Reg. Sess., 1992), c. 955, s. 11.)

§ 105-113.37. Payment of tax.

(a) Monthly Report. – Except for tax on a designated sale under subsection (b), the taxes

levied by this Article are payable when a report is required to be filed. A report is due on a

monthly basis. A monthly report covers sales and other activities occurring in a calendar month

and is due within 20 days after the end of the month covered by the report. A report shall be filed

on a form provided by the Secretary and shall contain the information required by the Secretary.

(b) (Effective until June 1, 2015) Designation of Exempt Sale. – A wholesale dealer

who sells a tobacco product to a person who has notified the wholesale dealer in writing that the

person intends to resell the item in a transaction that is exempt from tax under G.S.

105-113.35(a)(1) or (2) may, when filing a monthly report under subsection (a), designate the

quantity of tobacco products sold to the person for resale. A wholesale dealer shall report a

designated sale on a form provided by the Secretary.


A wholesale dealer is not required to pay tax on a designated sale when filing a monthly

report. The wholesale dealer shall pay the tax due on all other sales in accordance with this

section. A wholesale dealer or a customer of a wholesale dealer may not delay payment of the

tax due on a tobacco product by failing to pay tax on a sale that is not a designated sale or by

overstating the quantity of tobacco products that will be resold in a transaction exempt under

G.S. 105-113.35(a)(1) or (2).

A person who does not sell a tobacco product in a transaction exempt under G.S.

105-113.35(a)(1) or (2) after a wholesale dealer has failed to pay the tax due on the sale of the

item to the person in reliance on the person's written notification of intent is liable for the tax and

any penalties and interest due on the designated sale. If the Secretary determines that a tobacco

product reported as a designated sale is not sold as reported, the Secretary shall assess the person

who notified the wholesale dealer of an intention to resell the item in an exempt transaction for

the tax due on the sale and any applicable penalties and interest. A wholesale dealer who does

not pay tax on a tobacco product in reliance on a person's written notification of intent to resell

the item in an exempt transaction is not liable for any tax assessed on the item.

(b) (Effective June 1, 2015) Designation of Exempt Sale. – A wholesale dealer who sells

a tobacco product to a person who has notified the wholesale dealer in writing that the person

intends to resell the item in a transaction that is exempt from tax under G.S. 105-113.35(a2)(1) or

G.S. 105-113.35(a2)(2) may, when filing a monthly report under subsection (a), designate the

quantity of tobacco products sold to the person for resale. A wholesale dealer shall report a

designated sale on a form provided by the Secretary.

A wholesale dealer is not required to pay tax on a designated sale when filing a monthly

report. The wholesale dealer shall pay the tax due on all other sales in accordance with this

section. A wholesale dealer or a customer of a wholesale dealer may not delay payment of the

tax due on a tobacco product by failing to pay tax on a sale that is not a designated sale or by

overstating the quantity of tobacco products that will be resold in a transaction exempt under

G.S. 105-113.35(a2)(1) or G.S. 105-113.35(a2)(2).

A person who does not sell a tobacco product in a transaction exempt under G.S.

105-113.35(a2)(1) or G.S. 105-113.35(a2)(2) after a wholesale dealer has failed to pay the tax

due on the sale of the item to the person in reliance on the person's written notification of intent

is liable for the tax and any penalties and interest due on the designated sale. If the Secretary

determines that a tobacco product reported as a designated sale is not sold as reported, the

Secretary shall assess the person who notified the wholesale dealer of an intention to resell the

item in an exempt transaction for the tax due on the sale and any applicable penalties and

interest. A wholesale dealer who does not pay tax on a tobacco product in reliance on a person's

written notification of intent to resell the item in an exempt transaction is not liable for any tax

assessed on the item.

(c) Repealed by Session Laws 1991 (Regular Session, 1992), c. 955, s. 12.

(d) Shipping Report. – Any person who transports other tobacco products upon the public

highways, roads, or streets of this State must, upon notice from the Secretary, file a report in a

form prescribed by and containing the information required by the Secretary. (1969, c. 1075, s.

2; 1973, c. 476, s. 193; 1991, c. 689, s. 271; 1991 (Reg. Sess., 1992), c. 955, s. 12; 2009-559, s.

3; 2014-3, s. 15.1(c).)

§ 105-113.38. Bond or irrevocable letter of credit.


The Secretary may require a wholesale dealer or a retail dealer to furnish a bond in an

amount that adequately protects the State from loss if the dealer fails to pay taxes due under this

Part. A bond must be conditioned on compliance with this Part, payable to the State, and in the

form required by the Secretary. The bond amount must be proportionate to the anticipated tax

liability of the wholesale dealer or retail dealer. The Secretary should periodically review the

sufficiency of bonds required of dealers, and increase the amount of a required bond when the

amount of the bond furnished no longer covers the anticipated tax liability of the wholesale

dealer or retail dealer and decrease the amount when the Secretary determines that a smaller

bond amount will adequately protect the State from loss.

For purposes of this section, a wholesale dealer or a retail dealer may substitute an

irrevocable letter of credit for the secured bond required by this section. The letter of credit must

be issued by a commercial bank acceptable to the Secretary and available to the State as a

beneficiary. The letter of credit must be in a form acceptable to the Secretary, conditioned upon

compliance with this Article, and in the amounts stipulated in this section. (1969, c. 1075, s. 2;

1991, c. 689, s. 272; 2012-79, s. 2.1; 2014-3, s. 9.1(b).)

§ 105-113.39. Discount; refund.

(a) (Effective until June 1, 2015) Discount. – A wholesale dealer or a retail dealer who

is primarily liable under G.S. 105-113.35(b) for the excise taxes imposed by this Part, who files a

timely report under G.S. 105-113.37, and who sends a timely payment may deduct from the

amount due with the report a discount of two percent (2%). This discount covers expenses

incurred in preparing the records and reports required by this Part and the expense of furnishing a

bond.

(a) (Effective June 1, 2015) Discount. – A wholesale dealer or a retail dealer who is

primarily liable under G.S. 105-113.35(b) for the excise taxes imposed by this Part on tobacco

products but not including vapor products, who files a timely report under G.S. 105-113.37, and

who sends a timely payment may deduct from the amount due with the report a discount of two

percent (2%). This discount covers expenses incurred in preparing the records and reports

required by this Part and the expense of furnishing a bond.

(b) Refund. – A wholesale dealer or retail dealer who is primarily liable under G.S.

105-113.35(b) for the excise taxes imposed by this Part and is in possession of stale or otherwise

unsalable tobacco products upon which the tax has been paid may return the tobacco products to

the manufacturer and apply to the Secretary for refund of the tax. The application shall be in the

form prescribed by the Secretary and shall be accompanied by a written certificate signed under

penalty of perjury or an affidavit from the manufacturer listing the tobacco products returned to

the manufacturer by the applicant. The Secretary shall refund the tax paid, less the discount

allowed, on the listed products. (1969, c. 1075, s. 2; 1991, c. 689, s. 273; 2001-414, s. 4;

2003-284, s. 45A.1(c); 2004-84, s. 2(c); 2005-406, s. 2; 2008-207, s. 4; 2014-3, ss. 9.2, 15.1(d).)

§ 105-113.40. Records of sales, inventories, and purchases to be kept.

Every wholesale dealer and retail dealer shall keep accurate records of the dealer's purchases,

inventories, and sales of tobacco products. These records shall be open at all times for inspection

by the Secretary or an authorized representative of the Secretary. (1969, c. 1075, s. 2; 1973, c.

476, s. 193; 1991, c. 689, s. 274.)

§ 105-113.40A. Use of tax proceeds.


The Secretary must credit the net proceeds of the tax collected under this Part as follows:

(1) An amount equal to three percent (3%) of the cost price of the products to the

General Fund.

(1a) (Effective June 1, 2015) An amount equal to the revenue generated by the tax

on vapor products under G.S. 105-113.35(a1) to the General Fund.

(2) The remainder to the University Cancer Research Fund established under G.S.

116-29.1. (2009-451, s. 27A.5(d); 2010-95, s. 1; 2014-3, s. 15.1(e).)

Article 2B.

Soft Drink Tax.

§§ 105-113.41 through 105-113.67: Repealed by Session Laws 1996, Second Extra Session,

c. 13, s. 4.2, effective July 1, 1999.

Article 2C.

Alcoholic Beverage License and Excise Taxes.


§ 105-113.68. Definitions; scope.

(a) Definitions. – The following definitions apply in this Article:

(1) ABC Commission. – The North Carolina Alcoholic Beverage Control

Commission established under G.S. 18B-200.

(2) Repealed by Session Laws 2004-170, s. 6, effective August 2, 2004.

(3) ABC permit. – Defined in G.S. 18B-101.

(4) Alcoholic beverage. – Defined in G.S. 18B-101.

(4a) Antique spirituous liquor. – Defined in G.S. 18B-101.

(4b) Distillery permittee. – A distillery that holds a distillery permit issued by the

ABC Commission under G.S. 18B-1105.

(5) Fortified wine. – Defined in G.S. 18B-101.

(6) License. – A certificate, issued pursuant to this Article by a city or county,

that authorizes a person to engage in a phase of the alcoholic beverage

industry.

(7) Malt beverage. – Defined in G.S. 18B-101.


(9) Sale. – Defined in G.S. 18B-101.

(10) Secretary. – The Secretary of Revenue.

(11) Spirituous liquor or liquor. – Defined in G.S. 18B-101.

(12) Unfortified wine. – Defined in G.S. 18B-101.

(13) Wholesaler or importer. – When used with reference to wholesalers or

importers of wine or malt beverages, the term includes resident wineries that

sell their wines at retail and resident breweries that produce fewer than 25,000

barrels of malt beverages per year.

(14) Wine. – Unfortified and fortified wine.

(15) Wine shipper permittee. – A winery that holds a wine shipper permit issued by

the ABC Commission under G.S. 18B-1001.1.


(b) Scope. – All alcoholic beverages shall be taxed as provided in this Article regardless

whether they meet all criteria of these definitions. (1971, c. 872, s. 2; 1973, c. 476, s. 193; 1975,

c. 411, s. 1; 1981, c. 747, s. 2; 1985, c. 114, s. 1; c. 596, s. 3; 1993, c. 354, s. 9; c. 415, s. 26;

1995, c. 466, s. 16; 1998-95, s. 14; 1998-98, s. 58; 2003-402, s. 8; 2004-135, s. 3; 2004-170, s. 6;

2005-277, s. 2; 2005-435, s. 25(b); 2015-98, ss. 1(g), 4(b).)

§ 105-113.69. License tax; effect of license.

The taxes imposed in Part 3 of this Article are license taxes on the privilege of engaging in

the activity authorized by the license. Licenses issued under this Article authorize the licensee to

engage in only those activities that are authorized by the corresponding ABC permit. The

activities authorized by each retail ABC permit are described in Article 10 of Chapter 18B of the

General Statutes and the activities authorized by each commercial ABC permit are described in

Article 11 of that Chapter. (1949, c. 974, s. 6; 1951, c. 378, s. 4; 1963, c. 426, s. 12; 1971, c. 872,

s. 2; 1981, c. 747, s. 3; 1985, c. 114, s. 1; 1998-95, s. 15.)

§ 105-113.70. Issuance, duration, transfer of license.

(a) Issuance, Qualifications. – Each person who receives an ABC permit shall obtain the

corresponding local license, if any, under this Article. All local licenses are issued by the city or

county where the establishment for which the license is sought is located. The information

required to be provided and the qualifications for a local license are the same as the information

and qualifications required for the corresponding ABC permit. Upon proper application and

payment of the prescribed tax, issuance of a local license is mandatory if the applicant holds the

corresponding ABC permit. No local license may be issued under this Article until the applicant

has received from the ABC Commission the applicable permit for that activity, and no county

license may be issued for an establishment located in a city in that county until the applicant has

received from the city the applicable license for that activity.

(b) Duration. – All licenses issued under this section are annual licenses for the period

from May 1 to April 30.

(c) Transfer. – A license may not be transferred from one person to another or from one

location to another.

(d) License Exclusive. – A local government may not require a license for activities

related to the manufacture or sale of alcoholic beverages other than the licenses stated in this

Article. (1985, c. 114, s. 1; 1998-95, s. 16.)

§ 105-113.71. Local government may refuse to issue license.

(a) Refusal to Issue. – Notwithstanding G.S. 105-113.70, the governing board of a city or

county may refuse to issue a license if it finds that the applicant committed any act or permitted

any activity in the preceding year that would be grounds for suspension or revocation of his

permit under G.S. 18B-104. Before denying the license, the governing board shall give the

applicant an opportunity to appear at a hearing before the board and to offer evidence. The

applicant shall be given at least 10 days' notice of the hearing. At the conclusion of the hearing

the board shall make written findings of fact based on the evidence at the hearing. The applicant

may appeal the denial of a license to the superior court for that county, if notice of appeal is

given within 10 days of the denial.

(b) Local Exceptions. – The governing bodies of the following counties and cities in their

discretion may decline to issue on-premises unfortified wine licenses: the counties of Alamance,


Alexander, Ashe, Avery, Chatham, Clay, Duplin, Granville, Greene, Haywood, Jackson, Macon,

Madison, McDowell, Montgomery, Nash, Pender, Randolph, Robeson, Sampson, Transylvania,

Vance, Watauga, Wilkes, Yadkin; any city within any of those counties; and the cities of

Greensboro, Aulander, Pink Hill, and Zebulon. (1985, c. 114, s. 1.)

§ 105-113.72: Repealed by Session Laws 1998-95, s. 17.

§ 105-113.73. Misdemeanor.

Except as otherwise expressly provided, violation of a provision of this Article is a Class 1

misdemeanor. (1939, c. 158, s. 525; 1971, c. 872, s. 2; 1981, c. 747, s. 32; 1985, c. 114, s. 1;

1993, c. 539, s. 701; 1994, Ex. Sess., c. 24, s. 14(c); 2003-402, s. 9.)

Part 2. State Licenses.




Part 3. Local Licenses.

§ 105-113.77. City beer and wine retail licenses.

(a) License and Tax. – A person holding any of the following retail ABC permits for an

establishment located in a city shall obtain from the city a city license for that activity. The

annual tax for each license is as stated.

ABC Permit Tax for Corresponding License

On-premises malt beverage ....................................................................................................$15.00

Off-premises malt beverage .......................................................................................................5.00

On-premises unfortified wine,

on-premises fortified wine, or both ........................................................................................15.00

Off-premises unfortified wine,

off-premises fortified wine, or both .......................................................................................10.00

(b) Tax on Additional License. – The tax stated in subsection (a) is the tax for the first

license issued to a person. The tax for each additional license of the same type issued to that

person for the same year is one hundred ten percent (110%) of the base license tax, that increase

to apply progressively for each additional license. (1985, c. 114, s. 1.)

§ 105-113.78. County beer and wine retail licenses.

A person holding any of the following retail ABC permits for an establishment located in a

county shall obtain from the county a county license for that activity. The annual tax for each

license is as stated.

ABC Permit Tax for Corresponding License

On-premises malt beverage ..............................................................................................$25.00

Off-premises malt beverage .................................................................................................5.00

On-premises unfortified wine,

on-premises fortified wine, or both ..............................................................................25.00

Off-premises unfortified wine,


off-premises fortified wine, or both .............................................................................25.00

(1985, c. 114, s. 1.)

§ 105-113.79. City wholesaler license.

A city may require city malt beverage and wine wholesaler licenses for businesses located

inside the city, but may not require a license for a business located outside the city, regardless

whether that business sells or delivers malt beverages or wine inside the city. The city may

charge an annual tax of not more than thirty-seven dollars and fifty cents ($37.50) for a city malt

beverage wholesaler or a city wine wholesaler license. (1985, c. 114, s. 1; 1998-95, s. 21.)

Part 4. Excise Taxes, Distribution of Tax Revenue.

§ 105-113.80. Excise taxes on beer, wine, and liquor.

(a) Beer. – An excise tax of sixty-one and seventy-one hundredths cents (61.71¢) per

gallon is levied on the sale of malt beverages.

(b) Wine. – An excise tax of twenty-six and thirty-four hundredths cents (26.34¢) per

liter is levied on the sale of unfortified wine, and an excise tax of twenty-nine and thirty-four

hundredths cents (29.34¢) per liter is levied on the sale of fortified wine.

(c) Liquor. – An excise tax of thirty percent (30%) is levied on spirituous liquor and

antique spirituous liquor sold in ABC stores and in permitted distilleries. Pursuant to G.S.

18B-804(b), the price of liquor on which this tax is computed is the distiller's or the antique

spirituous liquor seller's price plus (i) the State ABC warehouse freight and bailment charges and

(ii) a markup for local ABC boards. (1985, c. 114, s. 1; 1987, c. 832, s. 2; 1998-95, s. 22;

2001-424, s. 34.23(c), (d); 2009-451, s. 27A.4(a); 2015-98, ss. 1(f), 4(c).)

§ 105-113.81. Exemptions.

(a) Major Disaster. – Wholesalers and importers of malt beverages and wine are not

required to remit excise taxes on malt beverages or wine rendered unsalable by a major disaster.

To qualify for this exemption, the wholesaler or importer shall prove to the satisfaction of the

Secretary that a major disaster occurred. A major disaster is the destruction, spoilage, or

rendering unsalable of 50 or more cases, or the equivalent, of malt beverages or 25 or more

cases, or the equivalent, of wine.

(b) Sales to Oceangoing Vessels. – Wholesalers and importers of malt beverages and

wine are not required to remit excise taxes on malt beverages and wine sold and delivered for use

on oceangoing vessels. An oceangoing vessel is a ship that plies the high seas in interstate or

foreign commerce, in the transport of freight or passengers, or both, for hire exclusively. To

qualify for this exemption the beverages shall be delivered to an officer or agent of the vessel for

use on that vessel. Sales made to officers, agents, crewmen, or passengers for their personal use

are not exempt.

(c) Sales to Armed Forces of the United States. – Wholesalers and importers of malt

beverages and wine are not required to remit excise taxes on malt beverages and wine sold to the

Armed Forces of the United States. The Secretary may require malt beverages and wine sold to

the Armed Forces of the United States to be marked "For Military Use Only" to facilitate

identification of those beverages.

(d) Out-of-State Sales. – Wholesalers and importers of malt beverages and wine are not

required to remit excise taxes on malt beverages and wine shipped out of this State for resale

outside the State.


(e) Tasting. – Resident breweries, wineries, and distilleries are not required to remit

excise taxes on malt beverages, wine, or spirituous liquor given free of charge to customers,

visitors, and employees on the manufacturer's licensed premises for consumption on those

premises. (1963, c. 992, s. 1; 1967, c. 759, s. 24; 1971, c. 872, s. 2; 1975, c. 586, s. 3; 1985, c.

114, s. 1; 2011-183, s. 71; 2015-98, s. 4(d).)

§ 105-113.81A: Repealed by Session Laws 2009-451, s. 14.19(f), effective July 1, 2009.

§ 105-113.82. Distribution of part of beer and wine taxes.

(a) Amount. – The Secretary must distribute annually a percentage of the net amount of

excise taxes collected on the sale of malt beverages and wine during the preceding 12-month

period ending March 31 to the counties or cities in which the retail sale of these beverages is

authorized in the entire county or city. The percentages to be distributed are as follows:

(1) Of the tax on malt beverages levied under G.S. 105-113.80(a), twenty and

forty-seven hundredths percent (20.47%).

(2) Of the tax on unfortified wine levied under G.S. 105-113.80(b), forty-nine and

forty-four hundredths percent (49.44%).

(3) Of the tax on fortified wine levied under G.S. 105-113.80(b), eighteen percent

(18%).

(a1) Method. – If malt beverages, unfortified wine, or fortified wine may be licensed to be

sold at retail in both a county and a city located in the county, both the county and city receive a

portion of the amount distributed, that portion to be determined on the basis of population. If one

of these beverages may be licensed to be sold at retail in a city located in a county in which the

sale of the beverage is otherwise prohibited, only the city receives a portion of the amount

distributed, that portion to be determined on the basis of population. The amounts distributable

under subsection (a) of this section must be computed separately.

(b) Repealed by Session Laws 2000, c. 173, s. 3, effective August 2, 2000.

(c) Exception. – Notwithstanding subsections (a) and (a1) of this section, in a county in

which ABC stores have been established by petition, the revenue shall be distributed as though

the entire county had approved the retail sale of a beverage whose retail sale is authorized in part

of the county.

(d) Time. – The revenue shall be distributed to cities and counties within 60 days after

March 31 of each year. The General Assembly finds that the revenue distributed under this

section is local revenue, not a State expenditure, for the purpose of Section 5(3) of Article III of

the North Carolina Constitution. Therefore, the Governor may not reduce or withhold the

distribution.

(e) Population Estimates. – To determine the population of a city or county for purposes

of the distribution required by this section, the Secretary shall use the most recent annual

estimate of population certified by the State Budget Officer.

(f) City Defined. – As used in this section, the term "city" means a city as defined in G.S.

153A-1(1) or an urban service district defined by the governing body of a consolidated

city-county.

(g) Use of Funds. – Funds distributed to a county or city under this section may be used

for any public purpose.

(h) Disqualification. – No municipality may receive any funds under this section if it was

incorporated with an effective date of on or after January 1, 2000, and is disqualified from


receiving funds under G.S. 136-41.2. No municipality may receive any funds under this section,

incorporated with an effective date on or after January 1, 2000, unless a majority of the mileage

of its streets is open to the public. The previous sentence becomes effective with respect to

distribution of funds on or after July 1, 1999. (1985, c. 114, s. 1; 1987, c. 836, s. 2; 1989 (Reg.

Sess., 1990), c. 813, s. 5; 1991, c. 689, s. 28(b); 1993, c. 321, s. 26(g); c. 485, s. 2; 1995, c. 17, s.

1; 1996, 2nd Ex. Sess., c. 18, s. 25.2(a); 1997-261, s. 109; 1999-458, s. 10; 2000-173, s. 3;

2002-120, s. 1; 2004-203, s. 5(d); 2005-435, s. 34(a); 2006-162, s. 1; 2007-527, s. 4; 2009-451, s.

27A.4(b); 2011-330, s. 7.)

Part 5. Administration.

§ 105-113.83. Payment of excise taxes.

(a) Liquor. – The excise tax on liquor levied under G.S. 105-113.80(c) is payable

monthly by the local ABC board and by a distillery permittee to the Secretary. The tax shall be

paid on or before the 15th day of the month following the month in which the tax was collected.

(b) Beer and Wine. – The excise taxes on malt beverages and wine levied under G.S.

105-113.80(a) and (b), respectively, are payable to the Secretary by the resident wholesaler or

importer who first handles the beverages in this State. The excise taxes levied under G.S.

105-113.80(b) on wine shipped directly to consumers in this State pursuant to G.S. 18B-1001.1

must be paid by the wine shipper permittee. The taxes on malt beverages and wine are payable

only once on the same beverages. The tax is due on or before the 15th day of the month

following the month in which the beverage is first sold or otherwise disposed of in this State by

the wholesaler, importer, or wine shipper permittee. When excise taxes are paid on wine or malt

beverages, the wholesaler, importer, or wine shipper permittee must submit to the Secretary

verified reports on forms provided by the Secretary detailing sales records for the month for

which the taxes are paid. The report must indicate the amount of excise tax due, contain the

information required by the Secretary, and indicate separately any transactions to which the

excise tax does not apply.

(c) Railroad Sales. – Each person operating a railroad train in this State on which

alcoholic beverages are sold must submit monthly reports of the amount of alcoholic beverages

sold in this State and must remit the applicable excise tax due on the sale of these beverages

when the report is submitted. The report is due on or before the 15th day of the month following

the month in which the beverages are sold. The report must be made on a form prescribed by the

Secretary. (1985, c. 114, s. 1; 1998-95, s. 23; 2003-402, s. 10; 2004-170, s. 7; 2005-435, s. 26;

2015-98, s. 4(e).)

§ 105-113.84. Report of resident brewery, resident winery, nonresident vendor, or wine

shipper permittee.

A resident brewery, resident winery, nonresident vendor, and wine shipper permittee must

file a monthly report with the Secretary. The report must list the amount of beverages delivered

to North Carolina wholesalers, importers, and purchasers under G.S. 18B-1001.1 during the

month. The report is due by the 15th day of the month following the month covered by the

report. The report must be filed on a form approved by the Secretary and must contain the

information required by the Secretary. (1985, c. 114, s. 1; 1998-95, s. 24; 2000-173, s. 4;

2003-402, s. 11.)

§ 105-113.85. Discount.


Each wholesaler or importer who files a timely return and sends a timely payment may

deduct from the amount payable a discount of two percent (2%). This discount covers losses due

to spoilage and breakage, expenses incurred in preparing the records and reports required by this

Article, and the expense of furnishing a bond. (1985, c. 114, s. 1; 2000-173, s. 5; 2001-414, s. 5;

2003-284, s. 45A.2(a); 2004-84, s. 2(d).)

§ 105-113.86. Bond or irrevocable letter of credit.

(a) Wholesalers and Importers. – A wholesaler or importer must file with the Secretary a

bond in an amount of not less than five thousand dollars ($5,000). The amount of the bond must

be proportionate to the anticipated tax liability of the wholesaler or importer. The Secretary

should periodically review the sufficiency of the bonds required under this section. The Secretary

may increase the proportionate amount required, not to exceed fifty thousand dollars ($50,000),

if the bond furnished no longer covers the taxpayer's anticipated tax liability. The Secretary may

decrease the proportionate amount required when the Secretary determines that a smaller bond

amount will adequately protect the State from loss. The bond must be conditioned on compliance

with this Article, payable to the State, in a form acceptable to the Secretary, and secured by a

corporate surety.

(b) Nonresident Vendors. – The Secretary may require the holder of a nonresident vendor

ABC permit to furnish a bond in an amount not to exceed two thousand dollars ($2,000). The

bond shall be conditioned on compliance with this Article, shall be payable to the State, shall be

in a form acceptable to the Secretary, and shall be secured by a corporate surety or by a pledge of

obligations of the federal government, the State, or a political subdivision of the State.

(c) Letter of Credit. – For purposes of this section, a wholesaler or importer or a

nonresident vendor may substitute an irrevocable letter of credit for the secured bond required by

this section. The letter of credit must be issued by a commercial bank acceptable to the Secretary

and available to the State as a beneficiary. The letter of credit must be in a form acceptable to the

Secretary, conditioned upon compliance with this Article, and in the amounts stipulated in this

section. (1985, c. 114, s. 1; 1987, c. 18; 1998-95, s. 25; 2014-3, s. 9.1(c).)

§ 105-113.87. Refund for excise tax paid on sacramental wine.

(a) Refund Allowed. – A person who purchases wine for the purpose stated in G.S.

18B-103(8) may obtain a refund from the Secretary for the amount of the excise tax levied under

this Article. The Secretary shall make refunds annually.

(b) Application. – An applicant for a refund authorized by this section shall file a written

request with the Secretary for the refund due for the prior calendar year on or before April 15.

The Secretary may by rule prescribe what information and records shall be supplied by the

applicant to qualify for the refund. No refund may be made if the application is filed more than

three years after the date it is due.

(c) Repealed by Session Laws 1998-212, s. 29A.14(e). (1985, c. 114, s. 1; 1998-212, s.

29A.14(e).)

§ 105-113.88. Record-keeping requirements.

A person who is required to file a report or return under this Article must keep a record of all

documents used to determine information the person provides in a report or return. The records

must be kept for three years from the due date of the report or return to which the records apply.


(1939, c. 158, s. 520; 1945, c. 903, s. 1; 1971, c. 872, s. 2; 1973, c. 476, s. 193; 1981, c. 747, s.

28; 1985, c. 114, s. 1; 2000-173, s. 6.)

§ 105-113.89. Other applicable administrative provisions.

The administrative provisions of Article 9 of this Chapter apply to this Article. (1985, c. 114,

s. 1; 1998-95, s. 26.)






Article 2D.

Unauthorized Substances Taxes.

§ 105-113.105. Purpose.

The purpose of this Article is to levy an excise tax to generate revenue for State and local law

enforcement agencies and for the General Fund. Nothing in this Article may in any manner

provide immunity from criminal prosecution for a person who possesses an illegal substance.

(1989, c. 772, s. 1; 1995, c. 340, s. 1; 1997-292, s. 1; 1998-98, s. 59.)



(1) Controlled Substance. – Defined in G.S. 90-87.


(3) Dealer. – Any of the following:

a. A person who actually or constructively possesses more than 42.5

grams of marijuana, seven or more grams of any other controlled

substance that is sold by weight, or 10 or more dosage units of any

other controlled substance that is not sold by weight.

b. A person who in violation of Chapter 18B of the General Statutes

possesses illicit spirituous liquor for sale.

c. A person who in violation of Chapter 18B of the General Statutes

possesses mash.

d. A person who in violation of Chapter 18B of the General Statutes

possesses an illicit mixed beverage for sale.


(4a) Illicit mixed beverage. – A mixed beverage, as defined in G.S. 18B-101,

composed in whole or in part from spirituous liquor on which the charge


imposed by G.S. 18B-804(b)(8) has not been paid, but not including a

premixed cocktail served from a closed package containing only one serving.

(4b) Illicit spirituous liquor. – Spirituous liquor, as defined in G.S. 105-113.68, not

authorized by the North Carolina Alcoholic Beverage Control Commission.

Some examples of illicit spirituous liquor are the products known as "bootleg

liquor", "moonshine", "non-tax-paid liquor", and "white liquor".

(4c) Local law enforcement agency. – A municipal police department, a county

police department, or a sheriff's office.

(4d) Low-street-value drug. – Any of the following controlled substances:

a. An anabolic steroid as defined in G.S. 90-91(k).

b. A depressant described in G.S. 90-89(4), 90-90(4), 90-91(b), or

90-92(a).

c. A hallucinogenic substance described in G.S. 90-89(3) or G.S.

90-90(5).

d. A stimulant described in G.S. 90-89(5), 90-90(3), 90-91(j),

90-92(a)(3), or 90-93(a)(3).

e. A controlled substance described in G.S. 90-91(c), (d), or (e),

90-92(a)(3), or (a)(5), or 90-93(a)1.


(6) Marijuana. – All parts of the plant of the genus Cannabis, whether growing or

not; the seeds of this plant; the resin extracted from any part of this plant; and

every compound, salt, derivative, mixture, or preparation of this plant, its

seeds, or its resin.

(6a) Mash. – The fermentable starchy mixture from which spirituous liquor can be

distilled.


(8) Secretary. – Defined in G.S. 105-228.90.

(8a) State law enforcement agency. – Any State agency, force, department, or unit

responsible for enforcing criminal laws.

(9) Unauthorized substance. – A controlled substance, an illicit mixed beverage,

illicit spirituous liquor, or mash. (1989, c. 772, s. 1; 1993, c. 354, s. 10; 1995,

c. 340, s. 1; 1997-292, s. 1; 1999-337, s. 19; 2000-119, ss. 3, 4.)

§ 105-113.107. Excise tax on unauthorized substances.

(a) Controlled Substances. – An excise tax is levied on controlled substances possessed,

either actually or constructively, by dealers at the following rates:

(1) At the rate of forty cents (40¢) for each gram, or fraction thereof, of harvested

marijuana stems and stalks that have been separated from and are not mixed

with any other parts of the marijuana plant.

(1a) At the rate of three dollars and fifty cents ($3.50) for each gram, or fraction

thereof, of marijuana, other than separated stems and stalks taxed under

subdivision (1) of this [sub]section, or synthetic cannabinoids.

(1b) At the rate of fifty dollars ($50.00) for each gram, or fraction thereof, of

cocaine.

(1c) At the rate of fifty dollars ($50.00) for each gram, or fraction thereof, of any

low-street-value drug that is sold by weight.


(2) At the rate of two hundred dollars ($200.00) for each gram, or fraction

thereof, of any other controlled substance that is sold by weight.

(2a) At the rate of fifty dollars ($50.00) for each 10 dosage units, or fraction

thereof, of any low-street-value drug that is not sold by weight.

(3) At the rate of two hundred dollars ($200.00) for each 10 dosage units, or

fraction thereof, of any other controlled substance that is not sold by weight.

(a1) Weight. – A quantity of marijuana or other controlled substance is measured by the

weight of the substance whether pure or impure or dilute, or by dosage units when the substance

is not sold by weight, in the dealer's possession. A quantity of a controlled substance is dilute if it

consists of a detectable quantity of pure controlled substance and any excipients or fillers.

(b) Illicit Spirituous Liquor. – An excise tax is levied on illicit spirituous liquor possessed

by a dealer at the following rates:

(1) At the rate of thirty-one dollars and seventy cents ($31.70) for each gallon, or

fraction thereof, of illicit spirituous liquor sold by the drink.

(2) At the rate of twelve dollars and eighty cents ($12.80) for each gallon, or

fraction thereof, of illicit spirituous liquor not sold by the drink.

(c) Mash. – An excise tax is levied on mash possessed by a dealer at the rate of one

dollar and twenty-eight cents ($1.28) for each gallon or fraction thereof.

(d) Illicit Mixed Beverages. – A tax is levied on illicit mixed beverages sold by a dealer

at the rate of twenty dollars ($20.00) on each four liters and a proportional sum on lesser

quantities. (1989, c. 772, s. 1; 1995, c. 340, s. 1; 1997-292, s. 1; 1998-218, s. 1; 2012-79, s.

2.2(a); 2014-3, s. 14.25.)

§ 105-113.107A. Exemptions.

(a) Authorized Possession. – The tax levied in this Article does not apply to a substance

in the possession of a dealer who is authorized by law to possess the substance. This exemption

applies only during the time the dealer's possession of the substance is authorized by law.

(b) Certain Marijuana Parts. – The tax levied in this Article does not apply to the

following marijuana:

(1) Harvested mature marijuana stalks when separated from and not mixed with

any other parts of the marijuana plant.

(2) Fiber or any other product of marijuana stalks described in subdivision (1) of

this subsection, except resin extracted from the stalks.

(3) Marijuana seeds that have been sterilized and are incapable of germination.

(4) Roots of the marijuana plant. (1995, c. 340, s. 1; 1997-292, s. 1.)

§ 105-113.108. Reports; revenue stamps.

(a) Revenue Stamps. – The Secretary shall issue stamps to affix to unauthorized

substances to indicate payment of the tax required by this Article. Dealers shall report the taxes

payable under this Article at the time and on the return prescribed by the Secretary.

Notwithstanding any other provision of law, dealers are not required to give their name, address,

social security number, or other identifying information on the return, and the return is not

required to be verified by oath or affirmation. Upon payment of the tax, the Secretary shall issue

stamps in an amount equal to the amount of the tax paid. Taxes may be paid and stamps may be

issued either by mail or in person.


(b) Reports. – Every local law enforcement agency and every State law enforcement

agency must report to the Department within 48 hours after seizing an unauthorized substance, or

making an arrest of an individual in possession of an unauthorized substance, listed in this

subsection upon which a stamp has not been affixed. The report must be in the form prescribed

by the Secretary and it must include the time and place of the arrest or seizure, the amount,

location, and kind of substance, the identification of an individual in possession of the substance

and that individual's social security number, and any other information prescribed by the

Secretary. The report must be made when the arrest or seizure involves any of the following

unauthorized substances upon which a stamp has not been affixed as required by this Article:

(1) More than 42.5 grams of marijuana.

(2) Seven or more grams of any other controlled substance that is sold by weight.

(3) Ten or more dosage units of any other controlled substance that is not sold by

weight.

(4) Any illicit mixed beverage.

(5) Any illicit spirituous liquor.

(6) Mash. (1989, c. 772, s. 1; 1995, c. 340, s. 1; 1997-292, s. 1; 2000-119, s. 5;

2004-170, s. 8.)

§ 105-113.109. When tax payable.

The tax imposed by this Article is payable by any dealer who actually or constructively

possesses an unauthorized substance in this State upon which the tax has not been paid, as

evidenced by a stamp. The tax is payable within 48 hours after the dealer acquires actual or

constructive possession of a non-tax-paid unauthorized substance, exclusive of Saturdays,

Sundays, and legal holidays of this State, in which case the tax is payable on the next working

day. Upon payment of the tax, the dealer shall permanently affix the appropriate stamps to the

unauthorized substance. Once the tax due on an unauthorized substance has been paid, no

additional tax is due under this Article even though the unauthorized substance may be handled

by other dealers. (1989, c. 772, s. 1; 1995, c. 340, s. 1; 1997-292, s. 1.)


§ 105-113.110A. Administration.

Article 9 of this Chapter applies to this Article. (1989 (Reg. Sess., 1990), c. 814, s. 7; 1995, c.

340, s. 1; 1997, c. 292, s. 1; 1998-218, s. 2.)

§ 105-113.111. Assessments.

Notwithstanding any other provision of law, an assessment against a dealer who possesses an

unauthorized substance to which a stamp has not been affixed as required by this Article shall be

made as provided in this section. The Secretary shall assess a tax, applicable penalties, and

interest based on personal knowledge or information available to the Secretary. The Secretary

shall notify the dealer in writing of the amount of the tax, penalty, and interest due, and demand

its immediate payment. The notice and demand shall be either mailed to the dealer at the dealer's

last known address or served on the dealer in person. If the dealer does not pay the tax, penalty,

and interest immediately upon receipt of the notice and demand, the Secretary shall collect the

tax, penalty, and interest pursuant to the jeopardy collection procedures in G.S. 105-241.23 or

the general collection procedures in G.S. 105-242, including causing execution to be issued


immediately against the personal property of the dealer, unless the dealer files with the Secretary

a bond in the amount of the asserted liability for the tax, penalty, and interest. The Secretary shall

use all means available to collect the tax, penalty, and interest from any property in which the

dealer has a legal, equitable, or beneficial interest. The dealer may seek review of the assessment

as provided in Article 9 of this Chapter. (1989, c. 772, s. 1; 1989 (Reg. Sess., 1990), c. 1039, s. 2;

1991 (Reg. Sess., 1992), c. 900, s. 20(d); 1995, c. 340, s. 1; 1997-292, s. 1; 2007-491, s. 8.)

§ 105-113.112. Confidentiality of information.

(a) Information obtained by the Department in the course of administering the tax

imposed by this Article, including information on whether the Department has issued a revenue

stamp to a person, is confidential tax information and is subject to the provisions of G.S.

105-259.

(b) Information obtained by the Department from the taxpayer in the course of

administering the tax imposed by this Article, including information on whether the Department

has issued a revenue stamp to a person, may not be used as evidence, as defined in G.S.

15A-971, by a prosecutor in a criminal prosecution of the taxpayer for an offense related to the

manufacturing, possession, transportation, distribution, or sale of the unauthorized substance.

Under this prohibition, no officer, employee, or agent of the Department may testify about this

information in a criminal prosecution of the taxpayer for an offense related to the manufacturing,

possession, transportation, distribution, or sale of the unauthorized substance. This subsection

implements the protections against double jeopardy and self-incrimination set out in Amendment

V of the United States Constitution and the restrictions in it apply regardless of whether

information may be disclosed under G.S. 105-259. An officer, employee, or agent of the

Department who provides evidence or testifies in violation of this subdivision is guilty of a Class

1 misdemeanor. (1989, c. 772, s. 1; 1993, c. 539, s. 702; 1994, Ex. Sess., c. 24, s. 14(c); 1997, c.

292, s. 1; 2005-435, s. 27; 2008-134, s. 68(a); 2013-414, s. 21.)

§ 105-113.113. Use of tax proceeds.

(a) Special Account. – The Unauthorized Substances Tax Account is established as a

special nonreverting account. The Secretary shall credit the proceeds of the tax levied by this

Article to the Account.

(b) Distribution. – The Secretary shall distribute unencumbered tax proceeds in the

Unauthorized Substances Tax Account on a quarterly or more frequent basis. Tax proceeds in the

Account are unencumbered when they are collectible under G.S. 105-241.22. The Secretary shall

distribute seventy-five percent (75%) of the unencumbered tax proceeds in the Account that were

collected by assessment to the State or local law enforcement agency that conducted the

investigation of a dealer that led to the assessment. If more than one State or local law

enforcement agency conducted the investigation, the Secretary shall determine the equitable

share for each agency based on the contribution each agency made to the investigation. The

Secretary shall credit the remaining unencumbered tax proceeds in the Account to the General

Fund.

(c) Refunds. – The refund of a tax that has already been distributed shall be drawn

initially from the Unauthorized Substances Tax Account. The amount of refunded taxes that

were distributed to a law enforcement agency under this section and any interest shall be

subtracted from succeeding distributions from the Account to that law enforcement agency. The

amount of refunded taxes that were credited to the General Fund under this section and any


interest shall be subtracted from succeeding credits to the General Fund from the Account. (1991

(Reg. Sess., 1992), c. 900, s. 20(c); 1995, c. 340, s. 1; 1997-292, s. 1; 2007-491, s. 9.)

Article 3.

Franchise Tax.

§ 105-114. Nature of taxes; definitions.

(a) Nature of Taxes. – The taxes levied in this Article upon persons and partnerships are

for the privilege of engaging in business or doing the act named.

(a1) Scope. – The taxes levied in this Article upon corporations are privilege or excise

taxes levied upon:

(1) Corporations organized under the laws of this State for the existence of the

corporate rights and privileges granted by their charters, and the enjoyment,

under the protection of the laws of this State, of the powers, rights, privileges

and immunities derived from the State by the form of such existence; and

(2) Corporations not organized under the laws of this State for doing business in

this State and for the benefit and protection which these corporations receive

from the government and laws of this State in doing business in this State.

(a2) Condition for Doing Business. – If the corporation is organized under the laws of this

State, the payment of the taxes levied by this Article is a condition precedent to the right to

continue in the corporate form of organization. If the corporation is not organized under the laws

of this State, payment of these taxes is a condition precedent to the right to continue to engage in

doing business in this State.

(a3) Tax Year. – The taxes levied in this Article are for the fiscal year of the State in

which the taxes become due, except that the taxes levied in G.S. 105-122 are for the income year

of the corporation in which the taxes become due.

(a4) No Double Taxation. – G.S. 105-122 does not apply to holding companies taxed

under G.S. 105-120.2. G.S. 105-122 applies to a corporation taxed under another section of this

Article only to the extent the taxes levied on the corporation in G.S. 105-122 exceed the taxes

levied in other sections of this Article on the corporation or on a limited liability company whose

assets must be included in the corporation's tax base under G.S. 105-114.1.

(b) Definitions. – The following definitions apply in this Article:

(1) City. – Defined in G.S. 105-228.90.


(2) Corporation. – A domestic corporation, a foreign corporation, an electric

membership corporation organized under Chapter 117 of the General Statutes

or doing business in this State, or an association that is organized for

pecuniary gain, has capital stock represented by shares, whether with or

without par value, and has privileges not possessed by individuals or

partnerships. The term includes a mutual or capital stock savings and loan

association or building and loan association chartered under the laws of any

state or of the United States. The term includes a limited liability company

that elects to be taxed as a corporation under the Code, but does not otherwise

include a limited liability company.


(3) Doing business. – Each and every act, power, or privilege exercised or

enjoyed in this State, as an incident to, or by virtue of the powers and

privileges granted by the laws of this State.

(4) Income year. – Defined in G.S. 105-130.2(10).

(5) (Effective January 1, 2017, for taxes due on or after that date) Total

assets. – The sum of all cash, investments, furniture, fixtures, equipment,

receivables, intangibles, and any other items of value owned by a person or a

business entity.

(c) Recodified as G.S. 105-114.1 by Session Laws 2002-126, s. 30G.2(b), effective

January 1, 2003. (1939, c. 158, s. 201; 1943, c. 400, s. 3; 1945, c. 708, s. 3; 1965, c. 287, s. 16;

1967, c. 286; 1969, c. 541, s. 6; 1973, c. 1287, s. 3; 1983, c. 713, s. 66; 1985, c. 656, s. 7; 1985

(Reg. Sess., 1986), c. 853, s. 1; 1987, c. 778, s. 1; 1987 (Reg. Sess., 1988), c. 1015, s. 2; 1989, c.

36, s. 2; 1989 (Reg. Sess., 1990), c. 981, s. 2; 1991, c. 30, s. 2; c. 689, s. 250; 1991 (Reg. Sess.,

1992), c. 922, s. 3; 1993, c. 12, s. 4; c. 354, s. 11; c. 485, s. 5; 1997-118, s. 4; 1998-98, ss. 60, 76;

1999-337, s. 20; 2000-173, s. 8; 2001-327, s. 2(b); 2002-126, s. 30G.2(b); 2005-435, s. 59.2(a);

2006-66, s. 24A.2(a); 2006-162, ss. 3(b), 22; 2008-107, s. 28.7(a); 2014-3, ss. 14.1, 14.26;

2015-6, s. 2.3; 2015-241, s. 32.15(a).)

§ 105-114.1. Limited liability companies.

(a) Definitions. – The following definitions apply in this section:

(1) Affiliated group. – Defined in section 1504 of the Code.

(2) Capital interest. – The right under a limited liability company's governing law

to receive a percentage of the company's assets upon dissolution after

payments to creditors.

(3) Entity. – A person that is not a human being.

(4) Governing law. – The law under which a limited liability company is

organized.

(5) Noncorporate limited liability company. – A limited liability company that

does not elect to be taxed as a corporation under the Code.

(b) (Effective until January 1, 2017) Controlled Companies. – If a corporation or an

affiliated group of corporations owns more than fifty percent (50%) of the capital interests in a

noncorporate limited liability company, the corporation or group of corporations must include in

its three tax bases pursuant to G.S. 105-122 the same percentage of (i) the noncorporate limited

liability company's capital stock, surplus, and undivided profits; (ii) fifty-five percent (55%) of

the noncorporate limited liability company's appraised ad valorem tax value of property; and (iii)

the noncorporate limited liability company's actual investment in tangible property in this State,

as appropriate.

(b) (Effective January 1, 2017, for taxes due on or after that date) Controlled

Companies. – If a corporation or an affiliated group of corporations owns more than fifty percent

(50%) of the capital interests in a noncorporate limited liability company, the corporation or

group of corporations must include in its three tax bases pursuant to G.S. 105-122 the same

percentage of (i) the noncorporate limited liability company's net worth; (ii) fifty-five percent

(55%) of the noncorporate limited liability company's appraised ad valorem tax value of

property; and (iii) the noncorporate limited liability company's actual investment in tangible

property in this State, as appropriate.


(c) Constructive Ownership. – Ownership of the capital interests in a noncorporate

limited liability company is determined by reference to the constructive ownership rules for

partnerships, estates, and trusts in section 318(a)(2)(A) and (B) of the Code with the following

modifications:

(1) The term "capital interest" is substituted for "stock" each place it appears.

(2) A noncorporate limited liability company and any noncorporate entity other

than a partnership, estate, or trust is treated as a partnership.

(3) The operating rule of section 318(a)(5) of the Code applies without regard to

section 318(a)(5)(C).

(d) (Effective until January 1, 2017) No Double Inclusion. – If a corporation is required

to include a percentage of a noncorporate limited liability company's assets in its tax bases under

this Article pursuant to subsection (b) of this section, its investment in the noncorporate limited

liability company is not included in its computation of capital stock base under G.S. 105-122(b).

(d) (Effective January 1, 2017, for taxes due on or after that date) No Double

Inclusion. – If a corporation is required to include a percentage of a noncorporate limited liability

company's assets in its tax bases under this Article pursuant to subsection (b) of this section, its

investment in the noncorporate limited liability company is not included in its computation of net

worth base under G.S. 105-122(b).

(e) Affiliated Group. – If the owner of the capital interests in a noncorporate limited

liability company is an affiliated group of corporations, the percentage to be included pursuant to

subsection (b) of this section by each group member that is doing business in this State is

determined by multiplying the capital interests in the noncorporate limited liability company

owned by the affiliated group by a fraction. The numerator of the fraction is the capital interests

in the noncorporate limited liability company owned by the group member, and the denominator

of the fraction is the capital interests in the noncorporate limited liability company owned by all

group members that are doing business in this State.

(f) Exemption. – This section does not apply to assets owned by a noncorporate limited

liability company if the total book value of the noncorporate limited liability company's assets

never exceeded one hundred fifty thousand dollars ($150,000) during its taxable year.

(g) Timing. – Ownership of the capital interests in a noncorporate limited liability

company is determined as of the last day of its taxable year. The adjustments pursuant to

subsections (b) and (d) of this section must be made to the owner's next following return filed

under this Article. If a noncorporate limited liability company and a corporation or an affiliated

group of corporations have engaged in a pattern of transferring assets between them with the

result that each did not own the capital interests on the last day of its taxable year, the ownership

of the capital interests in the noncorporate limited liability company must be determined as of the

last day of the corporation or group of corporations' taxable year.

(h) Penalty. – A taxpayer who, because of fraud with intent to evade tax, underpays the

tax under this Article on assets attributable to it under this section is guilty of a Class H felony in

accordance with G.S. 105-236(7). (2002-126, s. 30G.2(b); 2004-74, ss. 1, 2; 2004-170, s. 8.1;

2006-66, s. 24A.2(b); 2008-107, s. 28.7(b); 2013-157, s. 25; 2015-241, s. 32.15(e).)

§ 105-115. Repealed by Session Laws 1989 (Reg. Sess., 1990), c. 1002, s. 1.

§ 105-116: Repealed by Session Laws 2013-316, s. 4.1(a), effective July 1, 2014, and applicable

to gross receipts billed on or after that date.


§ 105-116.1: Repealed by Session Laws 2013-316, s. 4.1(a), effective July 1, 2014, and

applicable to gross receipts billed on or after that date.

§§ 105-117 through 115-118: Repealed by Session Laws 1995 (Regular Session, 1996), c.

646, s. 3.


§ 105-120: Repealed by Session Laws 2001-430, s. 12, effective January 1, 2002, and applies to

taxable services reflected on bills dated on or after January 1, 2002.


§ 105-120.2. Franchise or privilege tax on holding companies.

(a) (Effective until January 1, 2017) Every corporation, domestic and foreign,

incorporated or, by an act, domesticated under the laws of this State or doing business in this

State that, at the close of its taxable year, is a holding company as defined in subsection (c) of

this section, shall, pursuant to the provisions of G.S. 105-122, do all of the following:

(1) File a return.

(2) Determine the total amount of its issued and outstanding capital stock, surplus

and undivided profits.

(3) Apportion such outstanding capital stock, surplus and undivided profits to this

State.

(a) (Effective January 1, 2017, for taxes due on or after that date) Every corporation,

domestic and foreign, incorporated or, by an act, domesticated under the laws of this State or

doing business in this State that, at the close of its taxable year, is a holding company as defined

in subsection (c) of this section, shall, pursuant to the provisions of G.S. 105-122, do all of the

following:

(1) File a return.

(2) Determine the total amount of its net worth.

(3) Apportion its net worth to this State.

(b) (1) (Effective until January 1, 2017) Every corporation taxed under this section

shall annually pay to the Secretary of Revenue, at the time the return is due, a

franchise or privilege tax at the rate of one dollar and fifty cents ($1.50) per

one thousand dollars ($1,000) of the amount determined under subsection (a)

of this section, but in no case shall the tax be more than seventy-five thousand

dollars ($75,000) nor less than thirty-five dollars ($35.00).

(2) Notwithstanding the provisions of subdivision (1) of this subsection, if the tax

produced pursuant to application of this paragraph (2) exceeds the tax

produced pursuant to application of subdivision (1), then the tax is levied at

the rate of one dollar and fifty cents ($1.50) per one thousand dollars ($1,000)

on the greater of the following:

a. Fifty-five percent (55%) of the appraised value as determined for ad

valorem taxation of all the real and tangible personal property in this

State of each such corporation plus the total appraised value of


intangible property returned for taxation of intangible personal

property as computed under G.S. 105-122(d).

b. The total actual investment in tangible property in this State of such

corporation as computed under G.S. 105-122(d).

(b) (Effective January 1, 2017, for taxes due on or after that date) Tax Rate. – Every

corporation taxed under this section shall annually pay to the Secretary of Revenue, at the time

the return is due, the greater of the following:

(1) A franchise or privilege tax at the rate of one dollar and fifty cents ($1.50) per

one thousand dollars ($1,000) of the amount determined under subsection (a)

of this section, but in no case shall the tax be more than one hundred fifty

thousand dollars ($150,000) nor less than two hundred dollars ($200.00).

(2) If the tax calculated under this subdivision exceeds the tax calculated under

subdivision (1) of this subsection, then the tax is levied at the rate of one

dollar and fifty cents ($1.50) per one thousand dollars ($1,000) on the greater

of the following:

a. Fifty-five percent (55%) of the appraised value as determined for ad

valorem taxation of all the real and tangible personal property in this

State of each such corporation plus the total appraised value of

intangible property returned for taxation of intangible personal

property as computed under G.S. 105-122(d).

b. The total actual investment in tangible property in this State of such

corporation as computed under G.S. 105-122(d).

(c) For purposes of this section, a "holding company" is a corporation that satisfies at

least one of the following conditions:

(1) It has no assets other than ownership interests in corporations in which it

owns, directly or indirectly, more than fifty percent (50%) of the outstanding

voting stock or voting capital interests.

(2) It receives during its taxable year more than eighty percent (80%) of its gross

income from corporations in which it owns directly or indirectly more than

fifty percent (50%) of the outstanding voting stock or voting capital interests.

(d) Repealed by Session Laws 1985, c. 656, s. 39.

(e) Counties, cities and towns shall not levy a franchise tax on corporations taxed under

this section. The tax imposed under the provisions of G.S. 105-122 shall not apply to businesses

taxed under the provisions of this section.

(f) Repealed by Session Laws 2011-330, s. 3, effective June 27, 2011. (1975, c. 130, s.

1; 1985, c. 656, s. 39; 1985 (Reg. Sess., 1986), c. 854, s. 1; 1987 (Reg. Sess., 1988), c. 882, s.

4.2; 1991, c. 30, s. 4; 1998-98, s. 72; 2006-196, s. 9; 2011-330, s. 3; 2012-79, s. 2.3; 2013-414, s.

1(b); 2015-241, s. 32.15(b).)


§ 105-121.1. Mutual burial associations.

An annual franchise or privilege tax on all domestic mutual burial associations shall be due

and payable to the Secretary of Revenue on or before the first day of April of each year. The

amount of this franchise or privilege tax shall be based on the membership of such associations

according to the following schedule:


Membership less than 3,000 ............................................................. $15.00

Membership of 3,000 to 5,000 .............................................................20.00

Membership of 5,000 to 10,000 ......................................................... 25.00

Membership of 10,000 to 15,000 ....................................................... 30.00

Membership of 15,000 to 20,000 ....................................................... 35.00

Membership of 20,000 to 25,000 ....................................................... 40.00

Membership of 25,000 to 30,000 ....................................................... 45.00

Membership of 30,000 or more ......................................................... 50.00

(1943, c. 60, s. 2; 1973, c. 476, s. 193.)

§ 105-122. (Effective until January 1, 2017) Franchise or privilege tax on domestic and

foreign corporations.

(a) An annual franchise or privilege tax is imposed on a corporation doing business in

this State. The tax is determined on the basis of the books and records of the corporation as of the

close of its income year. A corporation subject to the tax must file a return under affirmation

with the Secretary at the place and in the manner prescribed by the Secretary. The return must be

signed by the president, vice-president, treasurer, or chief financial officer of the corporation.

The return is due on or before the fifteenth day of the fourth month following the end of the

corporation's income year.

(b) Determination of Capital Base. – A corporation taxed under this section shall

determine the total amount of its issued and outstanding capital stock, surplus, and undivided

profits. No reservation or allocation from surplus or undivided profits is allowed except as

provided below:

(1) Definite and accrued legal liabilities.

(1a) Billings in excess of costs that are considered a deferred liability under the

percentage of completion method of revenue recognition.

(2) Taxes accrued, dividends declared, and reserves for depreciation of tangible

assets and for amortization of intangible assets as permitted for income tax

purposes.

(3) When including deferred tax liabilities, a corporation may reduce the amount

included in its base by netting against that amount deferred tax assets. The

reduction may not decrease deferred tax liabilities below zero (0).

(4) Reserves for the cost of any air-cleaning device or sewage or waste treatment

plant, including waste lagoons, and pollution abatement equipment purchased

or constructed and installed which reduces the amount of air or water

pollution resulting from the emission of air contaminants or the discharge of

sewage and industrial wastes or other polluting materials or substances into

the outdoor atmosphere or streams, lakes, or rivers, upon condition that the

corporation claiming such deductible liability shall furnish to the Secretary a

certificate from the Department of Environmental Quality or from a local air

pollution control program for air-cleaning devices located in an area where the

Environmental Management Commission has certified a local air pollution

control program pursuant to G.S. 143-215.112 certifying that the

Environmental Management Commission or local air pollution control

program has found as a fact that the air-cleaning device, waste treatment plant

or pollution abatement equipment purchased or constructed and installed as


above described has actually been constructed and installed and that such

plant or equipment complies with the requirements of the Environmental

Management Commission or local air pollution control program with respect

to such devices, plants or equipment, that such device, plant or equipment is

being effectively operated in accordance with the terms and conditions set

forth in the permit, certificate of approval, or other document of approval

issued by the Environmental Management Commission or local air pollution

control program and that the primary purpose thereof is to reduce air or water

pollution resulting from the emission of air contaminants or the discharge of

sewage and waste and not merely incidental to other purposes and functions.

(5) Reserves for the cost of purchasing and installing equipment or constructing

facilities for the purpose of recycling or resource recovering of or from solid

waste or for the purpose of reducing the volume of hazardous waste generated

shall be treated as deductible for the purposes of this section upon condition

that the corporation claiming such deductible liability shall furnish to the

Secretary a certificate from the Department of Environmental Quality

certifying that the Department of Environmental Quality has found as a fact

that the equipment or facility has actually been purchased, installed or

constructed, that it is in conformance with all rules and regulations of the

Department of Environmental Quality, and the recycling or resource

recovering is the primary purpose of the facility or equipment.

(6) Reserves for the cost of constructing facilities of any private or public utility

built for the purpose of providing sewer service to residential and outlying

areas shall be treated as deductible for the purposes of this section; the

deductible liability allowed by this section shall apply only with respect to

such pollution abatement plants or equipment constructed or installed on or

after January 1, 1955.

(7) The cost of treasury stock.

(8) In the case of an international banking facility, the capital base shall be

reduced by the excess of the amount as of the end of the taxable year of all

assets of an international banking facility which are employed outside the

United States over liabilities of the international banking facility owed to

foreign persons. For purposes of such reduction, foreign persons shall have

the same meaning as defined in G.S. 105-130.5(b)(13)d.

Every corporation doing business in this State which is a parent, subsidiary, or affiliate of

another corporation shall add to its capital stock, surplus, and undivided profits all indebtedness

owed to a parent, subsidiary, or affiliated corporation as a part of its capital used in its business

and as a part of the base for franchise tax under this section. If any part of the capital of the

creditor corporation is capital borrowed from a source other than a parent, subsidiary, or affiliate,

the debtor corporation, which is required under this subsection to include in its tax base the

amount of debt by reason of being a parent, subsidiary, or affiliate of the creditor corporation,

may deduct from the debt included a proportionate part determined on the basis of the ratio of

the borrowed capital of the creditor corporation to the total assets of the creditor corporation. If

the creditor corporation is also taxable under the provisions of this section, the creditor

corporation is allowed to deduct from the total of its capital, surplus, and undivided profits the

amount of any debt owed to it by a parent, subsidiary or affiliated corporation to the extent that


the debt has been included in the tax base of the parent, subsidiary, or affiliated debtor

corporation reporting for taxation under the provisions of this section.

(b1) Definitions. – The following definitions apply in subsection (b) of this section:

(1) Affiliate. – The same meaning as specified in G.S. 105-130.2.

(2) Indebtedness. – All loans, credits, goods, supplies, or other capital of

whatsoever nature furnished by a parent, subsidiary, or affiliated corporation,

other than indebtedness endorsed, guaranteed, or otherwise supported by one

of these corporations.

(3) Parent. – The same meaning as specified in G.S. 105-130.2.

(4) Subsidiary. – The same meaning as specified in G.S. 105-130.2.

(c) Repealed by Session Laws 2007-491, s. 2, effective January 1, 2008.

(c1) Apportionment. – A corporation that is doing business in this State and in one or

more other states must apportion its capital stock, surplus, and undivided profits to this State. A

corporation must use the apportionment method set out in subdivision (1) of this subsection

unless the Department has authorized it to use a different method under subdivision (2) of this

subsection. The portion of a corporation's capital stock, surplus, and undivided profits

determined by applying the appropriate apportionment method is considered the amount of

capital stock, surplus, and undivided profits the corporation uses in its business in this State.

(1) Statutory. – A corporation that is subject to income tax under Article 4 of this

Chapter must apportion its capital stock, surplus, and undivided profits by

using the fraction it applies in apportioning its income under that Article. A

corporation that is not subject to income tax under Article 4 of this Chapter

must apportion its capital stock, surplus, and undivided profits by using the

fraction it would be required to apply in apportioning its income if it were

subject to that Article. The apportionment method set out in this subdivision is

considered the statutory method of apportionment and is presumed to be the

best method of determining the amount of a corporation's capital stock,

surplus, and undivided profits attributable to the corporation's business in this

State.

(2) Alternative. – A corporation that believes the statutory apportionment method

set out in subdivision (1) of this subsection subjects a greater portion of its

capital stock, surplus, and undivided profits to tax under this section than is

attributable to its business in this State may make a written request to the

Secretary for permission to use an alternative method. The request must set

out the reasons for the corporation's belief and propose an alternative method.

The corporation has the burden of establishing by clear, cogent, and

convincing proof that the statutory apportionment method subjects a greater

portion of the corporation's capital stock, surplus, and undivided profits to tax

under this section than is attributable to its business in this State and that the

proposed alternative method is a better method of determining the amount of

the corporation's capital stock, surplus, and undivided profits attributable to

the corporation's business in this State.

The Secretary must issue a written decision on a corporation's request for

an alternative apportionment method. If the decision grants the request, it

must describe the alternative method the corporation is authorized to use and

state the tax years to which the alternative method applies. A decision may


apply to no more than three tax years. A corporation may renew a request to

use an alternative apportionment method by following the procedure in this

subdivision. A decision of the Secretary on a request for an alternative

apportionment method is final and is not subject to administrative or judicial

review. A corporation authorized to use an alternative method may apportion

its capital stock, surplus, and undivided profits in accordance with the

alternative method or the statutory method.

(3) Repealed by Session Laws 2011-330, s. 5, effective June 27, 2011.

(d) After determining the proportion of its total capital stock, surplus and undivided

profits as set out in subsection (c1) of this section, which amount shall not be less than fifty-five

percent (55%) of the appraised value as determined for ad valorem taxation of all the real and

tangible personal property in this State of each corporation nor less than its total actual

investment in tangible property in this State, every corporation taxed under this section shall

annually pay to the Secretary of Revenue, at the time the return is due, a franchise or privilege

tax at the rate of one dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of the total

amount of capital stock, surplus and undivided profits as provided in this section. The tax

imposed in this section shall not be less than thirty-five dollars ($35.00) and is for the privilege

of carrying on, doing business, and/or the continuance of articles of incorporation or

domestication of each corporation in this State. Appraised value of tangible property including

real estate is the ad valorem valuation for the calendar year next preceding the due date of the

franchise tax return. The term "total actual investment in tangible property" as used in this

section means the total original purchase price or consideration to the reporting taxpayer of its

tangible properties, including real estate, in this State plus additions and improvements thereto

less reserve for depreciation as permitted for income tax purposes, and also less any indebtedness

incurred and existing by virtue of the purchase of any real estate and any permanent

improvements made thereon. In computing "total actual investment in tangible personal

property" a corporation may deduct reserves for the entire cost of any air-cleaning device or

sewage or waste treatment plant, including waste lagoons, and pollution abatement equipment

purchased or constructed and installed which reduces the amount of air or water pollution

resulting from the emission of air contaminants or the discharge of sewage and industrial wastes

or other polluting materials or substances into the outdoor atmosphere or into streams, lakes, or

rivers, upon condition that the corporation claiming this deduction shall furnish to the Secretary a

certificate from the Department of Environmental Quality or from a local air pollution control

program for air-cleaning devices located in an area where the Environmental Management

Commission has certified a local air pollution control program pursuant to G.S. 143-215.112

certifying that said Department or local air pollution control program has found as a fact that the

air-cleaning device, waste treatment plant or pollution abatement equipment purchased or

constructed and installed as above described has actually been constructed and installed and that

the device, plant or equipment complies with the requirements of the Environmental

Management Commission or local air pollution control program with respect to the devices,

plants or equipment, that the device, plant or equipment is being effectively operated in

accordance with the terms and conditions set forth in the permit, certificate of approval, or other

document of approval issued by the Environmental Management Commission or local air

pollution control program and that the primary purpose is to reduce air or water pollution

resulting from the emission of air contaminants or the discharge of sewage and waste and not

merely incidental to other purposes and functions. The cost of constructing facilities of any


private or public utility built for the purpose of providing sewer service to residential and

outlying areas is treated as deductible for the purposes of this section; the deductible liability

allowed by this section applies only with respect to pollution abatement plants or equipment

constructed or installed on or after January 1, 1955.

(d1) Credits. – A corporation is allowed a credit against the tax imposed by this section for

a taxable year equal to one-half of the amount of tax payable during the taxable year under

Article 5E of this Chapter. The credit allowed by this subsection may not exceed the amount of

tax imposed by this section for the taxable year, reduced by the sum of all other credits allowed

against that tax, except tax payments made by or on behalf of the taxpayer.

(e) Any corporation which changes its income year, and files a "short period" income tax

return pursuant to G.S. 105-130.15 shall file a franchise tax return in accordance with the

provisions of this section in the manner and as of the date specified in subsection (a) of this

section. Such corporation shall be entitled to deduct from the total franchise tax computed (on an

annual basis) on such return the amount of franchise tax previously paid which is applicable to

the period subsequent to the beginning of the new income year.

(f) The return and tax required by this section are in addition to all other reports required

or taxes levied and assessed in this State.

(g) Counties, cities and towns shall not levy a franchise tax on corporations taxed under

this section.

(h) Repealed by Session Laws 1981 (Regular Session, 1982), c. 1211, s. 5. (1939, c. 158,

s. 210; 1941, c. 50, s. 4; 1943, c. 400, s. 3; 1945, c. 708, s. 3; 1947, c. 501, s. 3; 1951, c. 643, s. 3;

1953, c. 1302, s. 3; 1955, c. 1100, s. 2½; c. 1350, s. 17; 1957, c. 1340, s. 3; 1959, c. 1259, s. 3;

1963, c. 1169, s. 1; 1967, c. 286; c. 892, ss. 10, 11; c. 1110, s. 2; 1973, c. 476, s. 193; c. 695, s.

17; c. 1262, s. 23; c. 1287, s. 3; 1975, c. 764, s. 2; 1977, c. 771, s. 4; 1981, c. 704, s. 18; c. 855, s.

3; 1981 (Reg. Sess., 1982), c. 1211, s. 5; 1985, c. 656, s. 40; 1985 (Reg. Sess., 1986), c. 826, s. 6;

c. 854, s. 1; 1987 (Reg. Sess., 1988), c. 882, s. 4.3; 1989, c. 148, s. 1; c. 727, ss. 218(39),

219(27); 1991, c. 30, s. 5; 1993, c. 532, s. 11; 1995 (Reg. Sess., 1996), c. 560, s. 1; 1997-443, s.

11A.119(a); 1998-22, ss. 8, 9; 1998-98, ss. 72, 77; 1998-217, s. 43; 1999-337, s. 21; 2001-427, s.

12(a); 2003-416, s. 5(j); 2006-95, s. 1.1; 2006-162, s. 2; 2007-491, ss. 2, 10, 11; 2008-134, ss.

3(a), (b); 2009-422, s. 1; 2009-445, s. 2; 2010-31, s. 31.9(a); 2010-89, s. 2(c); 2011-145, s.

31A.2(a); 2011-330, s. 5; 2012-79, s. 1.14(a); 2013-414, ss. 1(c), 2(a); 2015-241, s. 14.30(u).)

§ 105-122. (Effective January 1, 2017, for taxes due on or after that date) Franchise or

privilege tax on domestic and foreign corporations.

(a) Tax Imposed. – An annual franchise or privilege tax is imposed on a corporation

doing business in this State. The tax is determined on the basis of the books and records of the

corporation as of the close of its income year. A corporation subject to the tax must file a return

under affirmation with the Secretary at the place and in the manner prescribed by the Secretary.

The return must be signed by the president, vice-president, treasurer, or chief financial officer of

the corporation. The return is due on or before the fifteenth day of the fourth month following the

end of the corporation's income year.

(b) Determination of Net Worth. – A corporation taxed under this section shall determine

the total amount of its net worth. The net worth of a corporation is its total assets without regard

to the deduction for accumulated depreciation, depletion, or amortization less its total liabilities,

computed in accordance with generally accepted accounting principles as of the end of the

corporation's taxable year. If the corporation does not maintain its books and records in


accordance with generally accepted accounting principles, then its net worth is computed in

accordance with the accounting method used by the entity for federal tax purposes so long as the

method fairly reflects the corporation's net worth for purposes of the tax levied by this section. A

corporation's net worth is subject to the following adjustments:

(1) A deduction for accumulated depreciation, depletion, and amortization as

determined in accordance with the method used for federal tax purposes.

(1a) Repealed by Session Laws 2015-241, s. 32.15(d), effective January 1, 2017,

for taxes due on or after that date.

(2) An addition for indebtedness the corporation owes to a parent, a subsidiary, an

affiliate, or a noncorporate entity in which the corporation or an affiliated

group of corporations owns directly or indirectly more than fifty percent

(50%) of the capital interests of the noncorporate entity. The amount added

back to the corporation's net worth may be further adjusted if part of the

capital of the creditor is capital borrowed from a source other than a parent, a

subsidiary, or an affiliate. The debtor corporation may deduct a proportionate

part of the indebtedness based on the ratio of the borrowed capital of the

creditor to the total assets of the creditor. For purposes of this subdivision,

borrowed capital does not include indebtedness incurred by a bank arising out

of the receipt of a deposit and evidenced by a certificate of deposit, a

passbook, a cashier's check, a certified check, or other similar document.

(2a) If the creditor corporation is taxable under this Article, the creditor

corporation may deduct the amount of indebtedness owed to it by a parent,

subsidiary, or affiliated corporation to the extent that such indebtedness has

been added by the debtor corporation.

(3) A corporation may deduct the cost of treasury stock.

(4) through (8) Repealed by Session Laws 2015-241, s. 32.15(c), effective

January 1, 2017, for taxes due on or after that date.

(b1) Definitions. – The following definitions apply in subsection (b) of this section:

(1) Affiliate. – A corporation is an affiliate of another corporation when both are

directly or indirectly controlled by the same parent corporation or by the same

or associated financial interests by stock ownership, interlocking directors, or

by any other means whatsoever, whether the control is direct or through one

or more subsidiary, affiliated, or controlled corporations.

(2) Affiliated group. – The same meaning as defined in G.S. 105-114.1.

(3) Capital interest. – The right under an entity's governing law to receive a

percentage of the entity's assets upon dissolution after payments to creditors.

(4) Governing law. – The law under which the noncorporate entity is organized.

(5) Indebtedness. – All loans, credits, goods, supplies, or other capital of

whatsoever nature furnished by a parent, a subsidiary, an affiliate, or a

noncorporate entity in which the corporation or an affiliated group of

corporations owns directly or indirectly more than fifty percent (50%) of the

capital interests of the noncorporate entity, other than indebtedness endorsed,

guaranteed, or otherwise supported by one of these corporations.

(6) Noncorporate entity. – A person that is neither a human being nor a

corporation.


(7) Parent. – A corporation is a parent of another corporation when, directly or

indirectly, it controls the other corporation by stock ownership, interlocking

directors, or by any other means whatsoever exercised by the same or

associated financial interests, whether the control is direct or through one or

more subsidiary, affiliated, or controlled corporations.

(8) Subsidiary. – A corporation is a subsidiary of another corporation when,

directly or indirectly, it is subject to control by the other corporation by stock

ownership, interlocking directors, or by any other means whatsoever exercised

by the same or associated financial interest, whether the control is direct or

through one or more subsidiary, affiliated, or controlled corporations.

(c1) Apportionment. – A corporation that is doing business in this State and in one or

more other states must apportion its net worth to this State. A corporation must use the

apportionment method set out in subdivision (1) of this subsection unless the Department has

authorized it to use a different method under subdivision (2) of this subsection. The portion of a

corporation's net worth determined by applying the appropriate apportionment method is

considered the amount of net worth the corporation uses in its business in this State:

(1) Statutory. – A corporation that is subject to income tax under Article 4 of this

Chapter must apportion its net worth by using the fraction it applies in

apportioning its income under that Article. A corporation that is not subject to

income tax under Article 4 of this Chapter must apportion its net worth by

using the fraction it would be required to apply in apportioning its income if it

were subject to that Article. The apportionment method set out in this

subdivision is considered the statutory method of apportionment and is

presumed to be the best method of determining the amount of a corporation's

net worth attributable to the corporation's business in this State.

(2) Alternative. – A corporation that believes the statutory apportionment method

set out in subdivision (1) of this subsection subjects a greater portion of its net

worth to tax under this section than is attributable to its business in this State

may make a written request to the Secretary for permission to use an

alternative method. The request must set out the reasons for the corporation's

belief and propose an alternative method. The corporation has the burden of

establishing by clear, cogent, and convincing proof that the statutory

apportionment method subjects a greater portion of the corporation's net worth

to tax under this section than is attributable to its business in this State and

that the proposed alternative method is a better method of determining the

amount of the corporation's net worth attributable to the corporation's business

in this State.

The Secretary must issue a written decision on a corporation's request for

an alternative apportionment method. If the decision grants the request, it

must describe the alternative method the corporation is authorized to use and

state the tax years to which the alternative method applies. A decision may

apply to no more than three tax years. A corporation may renew a request to

use an alternative apportionment method by following the procedure in this

subdivision. A decision of the Secretary on a request for an alternative

apportionment method is final and is not subject to administrative or judicial

review. A corporation authorized to use an alternative method may apportion


its net worth in accordance with the alternative method or the statutory

method.


(d) Tax Base and Tax Rate. – After determining the proportion of its net worth as set out

in subsection (c1) of this section, which amount shall not be less than fifty-five percent (55%) of

the appraised value as determined for ad valorem taxation of all the real and tangible personal

property in this State of each corporation nor less than its total actual investment in tangible

property in this State, every corporation taxed under this section shall annually pay to the

Secretary of Revenue, at the time the return is due, a franchise or privilege tax at the rate of one

dollar and fifty cents ($1.50) per one thousand dollars ($1,000) of the total amount of net worth

as provided in this section. The tax imposed in this section shall not be less than two hundred

dollars ($200.00) and is for the privilege of carrying on, doing business, and/or the continuance

of articles of incorporation or domestication of each corporation in this State. Appraised value of

tangible property including real estate is the ad valorem valuation for the calendar year next

preceding the due date of the franchise tax return. The term "total actual investment in tangible

property" as used in this section means the total original purchase price or consideration to the

reporting taxpayer of its tangible properties, including real estate, in this State plus additions and

improvements thereto less reserve for depreciation as permitted for income tax purposes.

(d1) Repealed by Session Laws 2015-241, s. 32.15(c), effective January 1, 2017, for taxes

due on or after that date.

(e) Short Period. – Any corporation which changes its income year, and files a "short

period" income tax return pursuant to G.S. 105-130.15 shall file a franchise tax return in

accordance with the provisions of this section in the manner and as of the date specified in

subsection (a) of this section. Such corporation shall be entitled to deduct from the total franchise

tax computed (on an annual basis) on such return the amount of franchise tax previously paid

which is applicable to the period subsequent to the beginning of the new income year.

(f) Return and Tax. – The return and tax required by this section are in addition to all

other reports required or taxes levied and assessed in this State.

(g) Local Prohibition. – Counties, cities and towns shall not levy a franchise tax on

corporations taxed under this section.

(h) Repealed by Session Laws 1981 (Regular Session, 1982), c. 1211, s. 5. (1939, c. 158,

s. 210; 1941, c. 50, s. 4; 1943, c. 400, s. 3; 1945, c. 708, s. 3; 1947, c. 501, s. 3; 1951, c. 643, s. 3;

1953, c. 1302, s. 3; 1955, c. 1100, s. 2½; c. 1350, s. 17; 1957, c. 1340, s. 3; 1959, c. 1259, s. 3;

1963, c. 1169, s. 1; 1967, c. 286; c. 892, ss. 10, 11; c. 1110, s. 2; 1973, c. 476, s. 193; c. 695, s.

17; c. 1262, s. 23; c. 1287, s. 3; 1975, c. 764, s. 2; 1977, c. 771, s. 4; 1981, c. 704, s. 18; c. 855, s.


c. 854, s. 1; 1987 (Reg. Sess., 1988), c. 882, s. 4.3; 1989, c. 148, s. 1; c. 727, ss. 218(39),

219(27); 1991, c. 30, s. 5; 1993, c. 532, s. 11; 1995 (Reg. Sess., 1996), c. 560, s. 1; 1997-443, s.

11A.119(a); 1998-22, ss. 8, 9; 1998-98, ss. 72, 77; 1998-217, s. 43; 1999-337, s. 21; 2001-427, s.

12(a); 2003-416, s. 5(j); 2006-95, s. 1.1; 2006-162, s. 2; 2007-491, ss. 2, 10, 11; 2008-134, ss.

3(a), (b); 2009-422, s. 1; 2009-445, s. 2; 2010-31, s. 31.9(a); 2010-89, s. 2(c); 2011-145, s.

31A.2(a); 2011-330, s. 5; 2012-79, s. 1.14(a); 2013-414, ss. 1(c), 2(a); 2015-241, ss. 14.30(c),

(u), 32.15(c), (d); 2015-268, s. 10.1(a).)

§ 105-122.1. Credit for additional annual report fees paid by limited liability companies

subject to franchise tax.


A limited liability company subject to tax under this Article is allowed a credit against the tax

imposed by this Article equal to the difference between the annual report fee for corporations

under G.S. 55-1-22(a)(23) and the annual report fee for limited liability companies under G.S.

57D-1-22. The credit allowed by this section may not exceed the amount of tax imposed by this

Article for the taxable year reduced by the sum of all credits allowed, except payments of tax

made by or on behalf of the taxpayer. (2006-66, s. 24A.2(c); 2007-323, s. 30.6(b); 2013-157, s.

26.)



§ 105-125. Exempt corporations.

(a) Exemptions. – The following corporations are exempt from the taxes levied by this

Article. Upon request of the Secretary, an exempt corporation must establish its claim for

exemption in writing:

(1) A charitable, religious, fraternal, benevolent, scientific, or educational

corporation not operated for profit.

(2) An insurance company subject to tax under Article 8B of this Chapter.

(3) A mutual ditch or irrigation association, a mutual or cooperative telephone

association or company, a mutual canning association, a cooperative breeding

association, or a similar corporation of a purely local character deriving

receipts solely from assessments, dues, or fees collected from members for the

sole purpose of meeting expenses.

(4) A cooperative marketing association that operates solely for the purpose of

marketing the products of members or other farmers and returns to the

members and farmers the proceeds of sales, less the association's necessary

operating expenses, including interest and dividends on capital stock, on the

basis of the quantity of product furnished by them. The association's

operations may include activities directly related to these marketing activities.

(5) A production credit association organized under the federal Farm Credit Act

of 1933.

(6) A club organized and operated exclusively for pleasure, recreation, or other

nonprofit purposes, a civic league operated exclusively for the promotion of

social welfare, a business league, or a board of trade.

(7) A chamber of commerce or merchants' association not organized for profit, no

part of the net earnings of which inures to the benefit of a private stockholder,

an individual, or another corporation.

(8) An organization, such as a condominium association, a homeowners'

association, or a cooperative housing corporation not organized for profit, the

membership of which is limited to the owners or occupants of residential units

in the condominium, housing development, or cooperative housing

corporation. To qualify for the exemption, the organization must be operated

exclusively for the management, operation, preservation, maintenance, or

landscaping of the residential units owned by the organization or its members

or of the common areas and facilities that are contiguous to the residential


units and owned by the organization or by its members. To qualify for the

exemption, no part of the net earnings of the organization may inure, other

than through the performance of related services for the members of the

organization, to the benefit of any person.

(9) Except as otherwise provided by law, an organization exempt from federal

income tax under the Code.

Provided, that an entity that qualifies as a real estate mortgage investment conduit, as defined

in section 860D of the Code, is exempt from all of the taxes levied in this Article. Upon request

by the Secretary of Revenue, a real estate mortgage investment conduit must establish in writing

its qualification for this exemption.

(b) (Effective until January 1, 2017) Certain Investment Companies. –

A corporation doing business in North Carolina that meets one or more of the following

conditions may, in determining its capital stock, surplus, and undivided profits base for franchise

tax, deduct the aggregate market value of its investments in the stocks, bonds, debentures, or

other securities or evidences of debt of other corporations, partnerships, individuals,

municipalities, governmental agencies, or governments:

(1) A regulated investment company. – A regulated investment company is an

entity that qualifies as a regulated investment company under section 851 of

the Code.

(2) A REIT, unless the REIT is a captive REIT. – The terms "REIT" and "captive

REIT" have the same meanings as defined in G.S. 105-130.12.

(b) (Effective January 1, 2017, for taxes due on or after that date) Certain Investment

Companies. – A corporation doing business in North Carolina that meets one or more of the

following conditions may, in determining its net worth base for franchise tax, deduct the

aggregate market value of its investments in the stocks, bonds, debentures, or other securities or

evidences of debt of other corporations, partnerships, individuals, municipalities, governmental

agencies, or governments:

(1) A regulated investment company. – A regulated investment company is an

entity that qualifies as a regulated investment company under section 851 of

the Code.

(2) A REIT, unless the REIT is a captive REIT. – The terms "REIT" and "captive

REIT" have the same meanings as defined in G.S. 105-130.12. (1939, c. 158,

s. 213; 1951, c. 937, s. 3; 1955, c. 1313, s. 1; 1957, c. 1340, s. 3; 1963, c. 601,

s. 3; c. 1169, s. 1; 1967, c. 1110, s. 2; 1971, c. 820, s. 3; c. 833, s. 1; 1973, c.

476, s. 193; c. 1053, s. 2; c. 1287, s. 3; 1975, c. 591, s. 1; 1983, c. 28, s. 2; c.

713, s. 67; 1985 (Reg. Sess., 1986), c. 826, s. 4; 1991, c. 30, s. 6; 1993, c. 485,

s. 4; c. 494, s. 1; 2008-107, s. 28.7(c); 2011-330, s. 8; 2015-241, s. 32.15(f).)


§ 105-127. When franchise or privilege taxes payable.

(a) Every corporation, domestic or foreign, that is required to file a return with the

Secretary shall, unless otherwise provided, pay annually the franchise tax as required by G.S.

105-122.

(b) Repealed by Session Laws 1998-98, s. 78, effective August 14, 1998.


(c) It shall be the duty of the treasurer or other officer having charge of any such

corporation, domestic or foreign, upon which a tax is herein imposed, to transmit the amount of

the tax due to the Secretary of Revenue within the time provided by law for payment of same.

(d), (e) Repealed by Session Laws 2002-72, s. 11, effective August 12, 2002.

(f) After the end of the income year in which a domestic corporation is dissolved

pursuant to Part 1 of Article 14 of Chapter 55 of the General Statutes, the corporation is no

longer subject to the tax levied in this Article unless the Secretary of Revenue finds that the

corporation has engaged in business activities in this State not appropriate to winding up and

liquidating its business and affairs. (1939, c. 158, s. 215; 1973, c. 476, s. 193; 1991, c. 30, s. 7;

1993, c. 485, s. 6; 1998-98, s. 78; 2002-72, s. 11; 2011-330, s. 9; 2013-414, s. 1(d).)

§ 105-128. Power of attorney.

The Secretary of Revenue shall have the authority to require a proper power of attorney of

each and every agent for any taxpayer under this Article. (1939, c. 158, s. 217; 1973, c. 476, s.

193.)

§ 105-129. Extension of time for filing returns.

A return required by this Article is due on or before the date set in this Article. A taxpayer

may ask the Secretary for an extension of time to file a return under G.S. 105-263. (1939, c. 158,

s. 216; 1955, c. 1350, s. 17; 1959, c. 1259, s. 9; 1973, c. 476, s. 193; 1977, c. 1114, s. 6; 1989

(Reg. Sess., 1990), c. 984, s. 7; 1997-300, s. 2.)


Article 3A.

Tax Incentives For New And Expanding Businesses.

§§ 105-129.2 through 105-129.13: Repealed effective for business activities occurring on or


§ 105-129.14: Reserved for future codification purposes.

Article 3B.

Business And Energy Tax Credits.



(1) Business property. – Tangible personal property that is used by the taxpayer in

connection with a business or for the production of income and is capitalized

by the taxpayer for tax purposes under the Code. The term does not include,

however, a luxury passenger automobile taxable under section 4001 of the

Code or a watercraft used principally for entertainment and pleasure outings

for which no admission is charged.

(2) Cost. – In the case of property owned by the taxpayer, cost is determined

pursuant to regulations adopted under section 1012 of the Code, subject to the


limitation on cost provided in section 179 of the Code. In the case of property

the taxpayer leases from another, cost is value as determined pursuant to G.S.

105-130.4(j)(2), unless the property is renewable energy property for which

the taxpayer claims either a federal energy credit under section 48 of the Code

or a federal grant in lieu of that credit and makes a lease pass-through election

under the Code. In this circumstance, the cost of the leased renewable energy

property is the cost determined under the Code.

(3) Recodified as § 105-129.15(5).

(4) Hydroelectric generator. – A machine that produces electricity by water power

or by the friction of water or steam.

(4a) Repealed by Session Laws 2002-87, s. 3, effective August 22, 2002.

(4b) Installation of renewable energy property. – Renewable energy property that,

standing alone or in combination with other machinery, equipment, or real

property, is able to produce usable energy on its own.

(5) Purchase. – Defined in section 179 of the Code.

(6) Renewable biomass resources. – Organic matter produced by terrestrial and

aquatic plants and animals, such as standing vegetation, aquatic crops, forestry

and agricultural residues, spent pulping liquor, landfill wastes, and animal

wastes.

(7) Renewable energy property. – Any of the following machinery and equipment

or real property:

a. Biomass equipment that uses renewable biomass resources for biofuel

production of ethanol, methanol, and biodiesel; anaerobic biogas

production of methane utilizing agricultural and animal waste or

garbage; or commercial thermal or electrical generation. The term also

includes related devices for converting, conditioning, and storing the

liquid fuels, gas, and electricity produced with biomass equipment.

b. Combined heat and power system property. – Defined in section 48 of

the Code.

c. Geothermal equipment that meets either of the following descriptions:

1. It is a heat pump that uses the ground or groundwater as a

thermal energy source to heat a structure or as a thermal energy

sink to cool a structure.

2. It uses the internal heat of the earth as a substitute for

traditional energy for water heating or active space heating or

cooling.

d. Hydroelectric generators located at existing dams or in free-flowing

waterways, and related devices for water supply and control, and

converting, conditioning, and storing the electricity generated.

e. Solar energy equipment that uses solar radiation as a substitute for

traditional energy for water heating, active space heating and cooling,

passive heating, daylighting, generating electricity, distillation,

desalination, detoxification, or the production of industrial or

commercial process heat. The term also includes related devices

necessary for collecting, storing, exchanging, conditioning, or

converting solar energy to other useful forms of energy.


f. Wind equipment required to capture and convert wind energy into

electricity or mechanical power, and related devices for converting,

conditioning, and storing the electricity produced or relaying the

electricity by cable from the turbine motor to the power grid.

(8) Renewable fuel. – Either of the following:

a. Biodiesel, as defined in G.S. 105-449.60.

b. Ethanol either unmixed or in mixtures with gasoline that are seventy

percent (70%) or more ethanol by volume. (1996, 2nd Ex. Sess., c. 13,

s. 3.12; 1997-277, s. 3; 1998-55, s. 2; 1999-342, s. 2; 1999-360, s. 1;

2000-173, s. 1(a); 2001-431, s. 1; 2002-87, s. 3; 2004-153, s. 1;

2005-413, s. 4; 2006-162, s. 23; 2009-548, s. 1; 2010-167, s. 2(a).)

§§ 105-129.15A, 105-129.16: Repealed by Session Laws 2005-413, ss. 6 and 7, effective

September 20, 2005.

§ 105-129.16A. (See subsections (e) and (f) for sunset provisions) Credit for investing in

renewable energy property.

(a) Credit. – A taxpayer that has constructed, purchased, or leased renewable energy

property is allowed a credit equal to thirty-five percent (35%) of the cost of the property if the

property is placed in service in this State during the taxable year. In the case of renewable energy

property that serves a nonbusiness purpose, the credit must be taken for the taxable year in which

the property is placed in service. For all other renewable energy property, the entire credit may

not be taken for the taxable year in which the property is placed in service but must be taken in

five equal installments beginning with the taxable year in which the property is placed in service.

Upon request of a taxpayer that leases renewable energy property, the lessor of the property must

give the taxpayer a statement that describes the renewable energy property and states the cost of

the property. No credit is allowed under this section to the extent the cost of the renewable

energy property was provided by public funds. For the purposes of this section, "public funds"

does not include grants made under section 1603 of the American Recovery and Reinvestment

Tax Act of 2009.

(b) Expiration. – If, in one of the years in which the installment of a credit accrues, the

renewable energy property with respect to which the credit was claimed is disposed of, taken out

of service, or moved out of State, the credit expires and the taxpayer may not take any remaining

installment of the credit. The taxpayer may, however, take the portion of an installment that

accrued in a previous year and was carried forward to the extent permitted under G.S.

105-129.17.

(c) Ceilings. – The credit allowed by this section may not exceed the applicable ceilings

provided in this subsection.

(1) Business. – A ceiling of two million five hundred thousand dollars

($2,500,000) applies to each installation of renewable energy property placed

in service for a business purpose. Renewable energy property is placed in

service for a business purpose if the useful energy generated by the property is

offered for sale or is used on-site for a purpose other than providing energy to

a residence.

(2) Nonbusiness. – The following ceilings apply to renewable energy property

placed in service for a nonbusiness purpose:


a. One thousand four hundred dollars ($1,400) per dwelling unit for solar

energy equipment for domestic water heating, including pool heating.

b. Three thousand five hundred dollars ($3,500) per dwelling unit for

solar energy equipment for active space heating, combined active

space and domestic hot water systems, and passive space heating.

c. Eight thousand four hundred dollars ($8,400) for each installation of

geothermal equipment.

d. Ten thousand five hundred dollars ($10,500) for each installation of

any other renewable energy property.

(3) Eco-Industrial Park. – A ceiling of five million dollars ($5,000,000) applies to

each installation of renewable energy property placed in service at an

Eco-Industrial Park certified under G.S. 143B-437.08 for a business purpose

described in subdivision (1) of this subsection.

(d) No Double Credit. – A taxpayer that claims any other credit allowed under this

Chapter with respect to renewable energy property may not take the credit allowed in this section

with respect to the same property. A taxpayer may not take the credit allowed in this section for

renewable energy property the taxpayer leases from another unless the taxpayer obtains the

lessor's written certification that the lessor will not claim a credit under this Chapter with respect

to the property.

(e) Sunset. – Except for taxpayers covered by subsection (f) of this section, this section is

repealed effective for renewable energy property placed into service on or after January 1, 2016.

(f) Delayed Sunset. – This section is repealed effective for renewable energy property

placed in service on or after January 1, 2017.

A taxpayer is eligible for the delayed sunset provided by this subsection if the taxpayer

makes a timely application for the extension, pays the application fee, and meets both of the

following conditions on or before January 1, 2016: (i) incurred at least the minimum percentage

of costs of the project and (ii) completed at least the minimum percentage of the physical

construction of the project. For a project with a total size of less than 65 megawatts of direct

current capacity, the minimum percentage of incurred costs and partial construction is at least

eighty percent (80%). For a project with a total size of 65 megawatts or more of direct current

capacity, the minimum percentage of incurred costs and partial construction is at least fifty

percent (50%).

An application and payment must be filed with the Secretary on or before October 1, 2015.

The application must include the location of the project, an estimate of the total cost of the

project, the total anticipated credit to be claimed, and the total size in megawatt capacity of each

project proposed or under construction. The nonrefundable fee to be paid with the application is

one thousand dollars ($1,000) per megawatt of capacity, with a minimum fee of five thousand

dollars ($5,000).

A taxpayer must provide the documentation required under this subsection to the Department

on or before March 1, 2016, to verify that the taxpayer meets the minimum percentage of

incurred costs and partial construction required to be eligible for the sunset extension:

(1) A written certification signed by the taxpayer that, prior to January 1, 2016, at

least the minimum percentage of the physical construction of the project was

completed and that at least the minimum percentage of the total cost of the

project was incurred.


(2) A notarized copy of a written report prepared by an independent engineer duly

licensed in the State of North Carolina with expertise in the design and

construction of installations of renewable energy property stating that at least

the minimum percentage of the physical construction of the project was

completed prior to January 1, 2016.

(3) A notarized copy of a written report prepared by a certified public accountant

duly licensed to practice in the State of North Carolina with expertise in

accounting for and taxation of renewable energy property and that was

prepared in accordance with AT Section 201 of the American Institute of

Certified Public Accountants Standards for Agreed-Upon Procedures

Engagements stating that the minimum percentage of the total cost of the

project was paid or incurred as determined under Section 461 and other

relevant sections of the Code prior to January 1, 2016. (1999-342, s. 2;

2005-413, s. 5; 2009-548, s. 2; 2010-4, s. 1; 2010-147, s. 5.4; 2010-167, s.

2(b); 2015-6, s. 2.6; 2015-11, s. 1; 2015-264, s. 54.3.)

§ 105-129.16B: Recodified as G.S. 105-129.41 by Session Laws 2002-87, s. 2, as amended by

Session Laws 2003-416, s. 1, effective August 22, 2002, and applicable to credits for

buildings for which a federal tax credit is first claimed for a taxable year beginning on

or after January 1, 2002.

§ 105-129.16C: Repealed effective for taxable years beginning on or after January 1, 2006.

§ 105-129.16D. (Repealed effective for facilities placed in service on or after January 1,

2014) Credit for constructing renewable fuel facilities.

(a) Dispensing Credit. – A taxpayer that constructs and installs and places in service in

this State a qualified commercial facility for dispensing renewable fuel is allowed a credit equal

to fifteen percent (15%) of the cost to the taxpayer of constructing and installing the part of the

dispensing facility, including pumps, storage tanks, and related equipment, that is directly and

exclusively used for dispensing or storing renewable fuel. A facility is qualified if the equipment

used to store or dispense renewable fuel is labeled for this purpose and clearly identified as

associated with renewable fuel.

The entire credit may not be taken for the taxable year in which the facility is placed in

service but must be taken in three equal annual installments beginning with the taxable year in

which the facility is placed in service. If, in one of the years in which the installment of a credit

accrues, the portion of the facility directly and exclusively used for dispensing or storing

renewable fuel is disposed of or taken out of service, the credit expires and the taxpayer may not

take any remaining installment of the credit. The taxpayer may, however, take the portion of an

installment that accrued in a previous year and was carried forward to the extent permitted under

G.S. 105-129.17.

(b) Production Credit. – A taxpayer that constructs and places in service in this State a

commercial facility for processing renewable fuel is allowed a credit equal to twenty-five percent

(25%) of the cost to the taxpayer of constructing and equipping the facility. The entire credit may

not be taken for the taxable year in which the facility is placed in service but must be taken in

seven equal annual installments beginning with the taxable year in which the facility is placed in

service. If, in one of the years in which the installment of a credit accrues, the facility with


respect to which the credit was claimed is disposed of or taken out of service, the credit expires

and the taxpayer may not take any remaining installment of the credit. The taxpayer may,

however, take the portion of an installment that accrued in a previous year and was carried

forward to the extent permitted under G.S. 105-129.17.

Notwithstanding subsection (d) of this section, this section is repealed effective for facilities

placed in service on or after January 1, 2017, in the case of a taxpayer that meets both of the

following conditions:

(1) Signs a letter of commitment with the Department of Commerce on or before

September 1, 2013, stating the taxpayer's intent to construct and place into

service in this State a commercial facility for processing renewable fuel.

(2) Begins construction of the facility on or before December 31, 2013.

(b1) Alternative Production Credit. – In lieu of the credit allowed under subsection (b) of

this section, a taxpayer that constructs and places in service in this State three or more

commercial facilities for processing renewable fuel and that invests a total amount of at least

four hundred million dollars ($400,000,000) in the facilities is allowed a credit equal to

thirty-five percent (35%) of the cost to the taxpayer of constructing and equipping the facilities.

In order to claim the credit, the taxpayer must obtain a written determination from the Secretary

of Commerce that the taxpayer is expected to invest within a five-year period a total amount of at

least four hundred million dollars ($400,000,000) in three or more facilities. The credit must be

taken in seven equal annual installments beginning with the taxable year in which the first

facility is placed in service. If, in one of the years in which the installment of credit accrues, a

facility with respect to which the credit was claimed is disposed of or taken out of service and the

investment requirements of this subsection are no longer satisfied, the credit expires and the

taxpayer may take any remaining installment of the credit only to the extent allowed under

subsection (b) of this section. The taxpayer may, however, take the portion of an installment

under this subsection that accrued in a previous year and was carried forward to the extent

permitted under G.S. 105-129.17. Notwithstanding the provisions of G.S. 105-129.17, a taxpayer

may carry forward unused portions of the credit allowed under this subsection for the succeeding

10 years.

If a taxpayer that claimed a credit under this subsection fails to meet the requirements of this

subsection but meets the requirements of subsection (b) of this section, the taxpayer forfeits the

difference between the alternative credit claimed under this subsection and the credit allowed

under subsection (b) of this section. A taxpayer that forfeits part of the alternative credit under

this subsection is liable for the additional taxes avoided plus interest at the rate established under

G.S. 105-241.21, computed from the date the additional taxes would have been due if the credit

had not been allowed. The additional taxes and interest are due 30 days after the date the credit is

forfeited. A taxpayer that fails to pay the additional taxes and interest by the due date is subject

to penalties provided in G.S. 105-236.

(c) No Double Credit. – A taxpayer may not claim the credits allowed under subsections

(b) and (b1) of this section with respect to the same facility. A taxpayer that claims any other

credit allowed under this Chapter with respect to the costs of constructing and installing a facility

may not take the credit allowed in this section with respect to the same costs.

(d) Sunset. – This section is repealed effective for facilities placed in service on or after

January 1, 2014. (2004-153, s. 2; 2006-66, s. 24.7(a); 2006-259, s. 19.5(a); 2007-323, s. 31.9(a);

2010-95, s. 2; 2010-167, s. 1(a); 2012-36, s. 2; 2013-363, s. 11.3(a).)


§ 105-129.16E. Expired effective January 1, 2010, pursuant to the terms of former

subsection (d) of this section.

§ 105-129.16F. (Repealed for taxable years beginning on or after January 1, 2014) Credit

for biodiesel producers.

(a) Credit. – A biodiesel provider that produces at least 100,000 gallons of biodiesel

during the taxable year is allowed a credit equal to the per gallon excise tax the producer paid

under Article 36C of this Chapter on the biodiesel. For the purposes of this section, "biodiesel" is

liquid fuel derived in whole from agricultural products, animal fats, or wastes from agricultural

products or animal fats. The credit does not apply to tax paid on diesel fuel included in a

biodiesel blend. The credit may not exceed five hundred thousand dollars ($500,000) and is

subject to the limitations of G.S. 105-129.17.

(b) Sunset. – This section is repealed for taxable years beginning on or after January 1,

2014. (2006-66, s. 24.8(a); 2010-167, s. 1(b); 2012-36, s. 3.)

§ 105-129.16G. (Expiring for taxable years beginning on or after January 1, 2014) Work

Opportunity Tax Credit.

(a) Credit. – A taxpayer who is allowed a federal tax credit under Part IV, Subpart F of

the Code for the taxable year is allowed a credit against the tax imposed by this Part. The credit

is equal to a percentage of the amount of credit allowed under the Code for wages paid during

the taxable year for positions located in this State. A position is located in this State if more than

fifty percent (50%) of the employee's duties are performed in the State. The percentage is as

follows:

(1) For taxable year 2013, three percent (3%).

(2) For all other taxable years, six percent (6%).

(b) Sunset. – This section expires for taxable years beginning on or after January 1, 2014.

(2007-323, s. 31.21(a); 2008-134, s. 2(a); 2012-36, s. 4; 2013-10, s. 4.)

§ 105-129.16H. (For contingent repeal, see subsection (d)) Credit for donating funds to a

nonprofit organization or unit of State or local government to enable the

nonprofit or government unit to acquire renewable energy property.

(a) Credit. – A taxpayer who donates money to a tax-exempt nonprofit organization or a

unit of State or local government for the purpose of providing funds for the organization or

government unit to construct, purchase, or lease renewable energy property is allowed a credit

under this section if the donation is used for its intended purpose. A tax-exempt nonprofit

organization is an organization that is exempt from tax under section 501(c)(3) of the Code.

The amount of the credit allowed in this section is the taxpayer's share of the credit the

nonprofit organization or the unit of State or local government could claim under G.S.

105-129.16A if the nonprofit organization or government unit were subject to tax. The taxpayer's

share of the credit is calculated by dividing the taxpayer's donation by the cost of the renewable

energy property constructed, purchased, or leased by the nonprofit organization or government

unit and placed in service during the taxable year and then multiplying this percentage by the

amount of the credit the nonprofit organization or government unit could claim if it were subject

to tax. A taxpayer must take the credit allowed by this section for the taxable year in which the

property is placed in service. The installment requirements in G.S. 105-129.16A for

nonresidential property do not apply to the credit allowed in this section.


(b) Records. – A nonprofit organization or a unit of State or local government must keep

a record of all donations it receives for the purpose of providing funds for the organization to

construct, purchase, or lease renewable energy property and of the amount of the donations used

for this purpose. If a nonprofit organization or government unit places renewable energy property

in service that is purchased in whole or in part from donations made for this purpose, the

nonprofit organization or government unit must give each taxpayer who made a donation a

statement setting out the amount of the credit for which the taxpayer qualifies under this section.

The statement must describe the renewable energy property placed in service and state the cost

of the property, the amount of the credit the nonprofit organization or government unit could

claim under G.S. 105-129.16A if it were subject to tax, and the taxpayer's share of the credit

allowed in this section. If the donations made for the renewable energy property exceed the cost

of the property, the nonprofit organization or government unit must prorate each taxpayer's share

of the credit. The sum of the credits allowed under this section to taxpayers who make donations

to a nonprofit organization or a government unit may not exceed the amount of the credit the

nonprofit organization or government unit could claim under G.S. 105-129.16A if it were subject

to tax.

(c) No Double Benefit. – A taxpayer who claims a credit under this section based on a

donation to a nonprofit organization or a unit of State or local government is not allowed to

deduct this donation as a charitable contribution.

(d) Sunset. – This section is repealed as of the date that G.S. 105-129.16A is repealed.

The repeal applies to donations made for renewable energy property placed in service on or after

the date the section is repealed. (2007-397, s. 13(a); 2008-107, s. 28.25(a); 2008-134, s. 70;

2013-414, s. 32.)

§ 105-129.16I. (Repealed effective for a renewable energy property facility placed in

service on or after January 1, 2014) Credit for a renewable energy property

facility.

(a) Credit. – A taxpayer that places in service in this State a commercial facility for the

manufacture of renewable energy property or a major component subassembly for a solar array

or a wind turbine is allowed a credit. A taxpayer places a facility in service if it constructs the

facility or converts its existing manufacturing facility to change the product it manufactures. For

a taxpayer that constructs a facility, the credit is twenty-five percent (25%) of the taxpayer's cost

to construct and equip the facility. For a taxpayer that converts a facility, the credit is twenty-five

percent (25%) of the taxpayer's cost to convert and equip the existing facility. A taxpayer that

claims any other credit allowed under this Chapter with respect to the facility may not take the

credit allowed in this section with respect to that facility.

(b) Installments. – The entire credit may not be taken for the taxable year in which the

facility is placed in service but must be taken in five equal annual installments beginning with

the taxable year in which the facility is placed in service. If, in one of the years in which the

installment of a credit accrues, the facility with respect to which the credit was claimed is

disposed of or taken out of service, the credit expires and the taxpayer may not take any

remaining installment of the credit. The taxpayer may, however, take the portion of an


G.S. 105-129.17.

(c) Sunset. – This section is repealed effective for a renewable energy property facility

placed in service on or after January 1, 2014. (2010-167, s. 3(a).)


§ 105-129.16J. Temporary unemployment insurance refundable tax credit.

(a) Credit. – A small business that makes contributions during the taxable year to the

State Unemployment Insurance Fund with respect to wages paid for employment in this State is

allowed a credit equal to twenty-five percent (25%) of the contributions. A small business is a

business whose cumulative gross receipts from business activity for the taxable year do not

exceed one million dollars ($1,000,000).

(b) Refundable. – Notwithstanding G.S. 105-129.17, the credit allowed by this section is

subject to the following:

(1) The credit may only be claimed against the income taxes imposed by Article 4

of this Chapter.

(2) If the credit exceeds the amount of tax imposed by Article 4 of this Chapter

for the taxable year reduced by the sum of all credits allowable, the excess is

refundable. The refundable excess is governed by the provisions governing a

refund of an overpayment by the taxpayer of the tax imposed in that Article.

In computing the amount of tax against which multiple credits are allowed,

nonrefundable credits are subtracted before refundable credits.

(c) Applicability. – This section applies only to taxable years 2010 and 2011. (2010-31,

s. 31.1A(a).)

§ 105-129.17. Tax election; cap.

(a) Tax Election. – The credit allowed in G.S. 105-129.16A is allowed against the

franchise tax levied in Article 3 of this Chapter, the income taxes levied in Article 4 of this

Chapter, or the gross premiums tax levied in Article 8B of this Chapter. All other credits allowed

in this Article are allowed against the franchise tax levied in Article 3 of this Chapter or the

income taxes levied in Article 4 of this Chapter. The taxpayer must elect the tax against which a

credit will be claimed when filing the return on which the first installment of the credit is

claimed. This election is binding. Any carryforwards of a credit must be claimed against the

same tax.

(b) Cap. – The credits allowed in this Article may not exceed fifty percent (50%) of the

tax against which they are claimed for the taxable year, reduced by the sum of all other credits

allowed against that tax, except tax payments made by or on behalf of the taxpayer. This

limitation applies to the cumulative amount of credit, including carryforwards, claimed by the

taxpayer under this Article against each tax for the taxable year. Any unused portion of the

credits may be carried forward for the succeeding five years. (1996, 2nd Ex. Sess., c. 13, s. 3.12;

1997-277, s. 3; 1999-342, s. 2; 1999-360, ss. 1, 13; 2000-140, ss. 63(a), 88; 2001-431, s. 3;

2002-87, s. 5; 2009-548, s. 3.)

§ 105-129.18. (See Editor's note for repeal) Substantiation.

To claim a credit allowed by this Article, the taxpayer must provide any information required

by the Secretary of Revenue. Every taxpayer claiming a credit under this Article must maintain

and make available for inspection by the Secretary of Revenue any records the Secretary

considers necessary to determine and verify the amount of the credit to which the taxpayer is

entitled. The burden of proving eligibility for a credit and the amount of the credit rests upon the

taxpayer, and no credit may be allowed to a taxpayer that fails to maintain adequate records or to


make them available for inspection. (1996, 2nd Ex. Sess., c. 13, s. 3.12; 1997-277, s. 3;

1999-342, s. 2; 1999-360, ss. 1, 14; 2000-140, ss. 63(b), 88.)

§ 105-129.19. Report.

The Department must include in the economic incentives report required by G.S. 105-256 the

following information itemized by credit and by taxpayer:

(1) The number of taxpayers that took the credits allowed in this Article.

(2) The cost of renewable energy property with respect to which credits were

taken.

(2a) Repealed by Session Laws 2002-87, s. 6, effective August 22, 2002.

(3) The total cost to the General Fund of the credits taken. (1996, 2nd Ex. Sess.,

c. 13, s. 3.12; 1997-277, s. 3; 1999-342, s. 2; 1999-360, ss. 1, 15; 2000-140,

ss. 63(c), 88; 2001-414, s. 10; 2002-87, s. 6; 2005-429, s. 2.3; 2010-166, s.

1.2.)

§§ 105-129.20 through 105-129.24. Reserved for future codification purposes.

Article 3C.

Tax Incentives For Recycling Facilities.



(1) Reserved.

(2) Reserved.

(3) Repealed by Session Laws 2010-166, s. 2.1, effective July 1, 2010.

(4) Machinery and equipment. – Engines, machinery, tools, and implements used

or designed to be used in the business for which the credit is claimed. The

term does not include real property as defined in G.S. 105-273 or rolling stock

as defined in G.S. 105-333.

(5) Major recycling facility. – A recycling facility that qualifies under G.S.

105-129.26(a).

(6) Owner. – A person who owns or leases a recycling facility.

(7) Post-consumer waste material. – Any product that was generated by a

business or consumer, has served its intended end use, and has been separated

from the solid waste stream for the purpose of recycling. The term includes

material acquired by a recycling facility either directly or indirectly, such as

through a broker or an agent.


(9) Recycling facility. – A manufacturing plant at least three-fourths of whose

products are made of at least fifty percent (50%) post-consumer waste

material measured by weight or volume. The term includes real and personal

property located at or on land in the same county and reasonably near the

plant site and used to perform business functions related to the plant or to

transport materials and products to or from the plant. The term also includes

utility infrastructure and transportation infrastructure to and from the plant.

(1998-55, s. 12; 2010-166, s. 2.1.)


§ 105-129.26. Qualification; forfeiture.

(a) Major Recycling Facility. – A recycling facility qualifies for the tax benefits provided

in this Article and in Article 5 of this Chapter for major recycling facilities if it meets all of the


(1) The facility is located in an area that, at the time the owner began construction

of the facility, was a development tier one area as defined in G.S.

143B-437.08.

(2) The Secretary of Commerce has certified that the owner will, by the end of the

fourth year after the year the owner begins construction of the recycling

facility, invest at least three hundred million dollars ($300,000,000) in the

facility and create at least 250 new, full-time jobs at the facility.

(3) Repealed by Session Laws 2014-3, s. 14.2, effective May 29, 2014.

(b) Repealed by Session Laws 2010-166, s. 2.1, effective July 1, 2010.

(c) Forfeiture. – If the owner of a major recycling facility fails to make the required

minimum investment or create the required number of new jobs within the period certified by the

Secretary of Commerce under this section, the recycling facility no longer qualifies for the

applicable recycling facility tax benefits provided in this Article and in Article 5 of this Chapter

and forfeits all tax benefits previously received under those Articles. Forfeiture does not occur,

however, if the failure was due to events beyond the owner's control. Upon forfeiture of tax

benefits previously received, the owner is liable under Part 1 of Article 4 of this Chapter for a tax

equal to the amount of all past taxes under Articles 3, 4, and 5 previously avoided as a result of

the tax benefits received plus interest at the rate established in G.S. 105-241.21, computed from

the date the taxes would have been due if the tax benefits had not been received. The tax and

interest are due 30 days after the date of the forfeiture. An owner that fails to pay the tax and

interest is subject to the penalties provided in G.S. 105-236.

(d) Substantiation. – To claim a credit allowed by this Article, the owner must provide

any information required by the Secretary of Revenue. Every owner claiming a credit under this

Article shall maintain and make available for inspection by the Secretary of Revenue any records

the Secretary considers necessary to determine and verify the amount of the credit to which the

owner is entitled. The burden of proving eligibility for the credit and the amount of the credit

shall rest upon the owner, and no credit shall be allowed to an owner that fails to maintain

adequate records or to make them available for inspection.

(e) Report. – The Department must include in the economic incentives report required by

G.S. 105-256 the following information itemized by taxpayer:

(1) The number and location of major recycling facilities qualified under this

Article.

(2) The number of new jobs created by each recycling facility.

(3) The amount of investment in each recycling facility.

(4) The amount of credits taken under this Article. (1998-55, s. 12; 2005-429, s.

2.4; 2007-491, s. 44(1)a; 2010-166, ss. 1.3, 2.1; 2013-414, s. 33; 2014-3, s.

14.2.)

§ 105-129.27. Credit for investing in major recycling facility.

(a) Credit. – An owner that purchases or leases machinery and equipment for a major

recycling facility in this State during the taxable year is allowed a credit equal to fifty percent


(50%) of the amount payable by the owner during the taxable year to purchase or lease the

machinery and equipment.

(b) Taxes Credited. – The credit provided in this section is allowed against the franchise

tax levied in Article 3 of this Chapter and the income tax levied in Part 1 of Article 4 of this

Chapter. Any other nonrefundable credits allowed the owner are subtracted before the credit

allowed by this section.

(c) Carryforwards. – The credit provided in this section may not exceed the amount of

tax against which it is claimed for the taxable year, reduced by the sum of all other credits

allowed against that tax, except tax payments made by or on behalf of the owner. Any unused

portion of the credit may be carried forward for the succeeding 25 years.

(d) Change in Ownership of Facility. – The sale, merger, consolidation, conversion,

acquisition, or bankruptcy of a recycling facility, or any transaction by which the facility is

reformulated as another business, does not create new eligibility in a succeeding owner with

respect to a credit for which the predecessor was not eligible under this section. A successor

business may, however, take any carried-over portion of a credit that its predecessor could have

taken if it had a tax liability.

(e) Forfeiture. – If any machinery or equipment for which a credit was allowed under this

section is not placed in service within 30 months after the credit was allowed, the credit is

forfeited. A taxpayer that forfeits a credit under this section is liable for all past taxes avoided as

a result of the credit plus interest at the rate established under G.S. 105-241.21, computed from

the date the taxes would have been due if the credit had not been allowed. The past taxes and

interest are due 30 days after the date the credit is forfeited; a taxpayer that fails to pay the past

taxes and interest by the due date is subject to the penalties provided in G.S. 105-236.

(f) No Double Credit. – A recycling facility that is eligible for the credit allowed in this

section is not allowed the credit for investing in machinery and equipment provided in G.S.

105-129.9 or G.S. 105-129.88. (1998-55, s. 12; 1999-369, s. 5.3; 2007-491, s. 44(1)a; 2009-445,

s. 3(a); 2010-166, s. 2.1.)

§ 105-129.28: Repealed by Session Laws 1998-55, s, 19, effective for taxable years beginning

on or after January 1, 2008.


Article 3D.

Historic Rehabilitation Tax Credits.

§ 105-129.35. Credit for rehabilitating income-producing historic structure.

(a) Credit. – A taxpayer who is allowed a federal income tax credit under section 47 of

the Code for making qualified rehabilitation expenditures for a certified historic structure located

in this State is allowed a credit equal to twenty percent (20%) of the expenditures that qualify for

the federal credit. If the certified historic structure is a facility that at one time served as a State

training school for juvenile offenders, the amount of the credit is equal to forty percent (40%) of

the expenditures that qualify for the federal credit. To claim the credit allowed by this

subsection, the taxpayer must provide a copy of the certification obtained from the State Historic

Preservation Officer verifying that the historic structure has been rehabilitated in accordance

with this subsection.


(b) Notwithstanding the provisions of G.S. 105-131.8 and G.S. 105-269.15, a

pass-through entity that qualifies for the credit provided in this section may allocate the credit

among any of its owners in its discretion as long as an owner's adjusted basis in the pass-through

entity, as determined under the Code, at the end of the taxable year in which the certified historic

structure is placed in service, is at least forty percent (40%) of the amount of credit allocated to

that owner. Owners to whom a credit is allocated are allowed the credit as if they had qualified

for the credit directly. A pass-through entity and its owners must include with their tax returns

for every taxable year in which an allocated credit is claimed a statement of the allocation made

by the pass-through entity and the allocation that would have been required under G.S.

105-131.8 or G.S. 105-269.15.

(c) Definitions. – The following definitions apply in this section:

(1) Certified historic structure. – Defined in section 47 of the Code.

(2) Pass-through entity. – Defined in G.S. 105-228.90.

(3) Qualified rehabilitation expenditures. – Defined in section 47 of the Code.

(4) State Historic Preservation Officer. – Defined in G.S. 105-129.36. (1993, c.

527, ss. 1, 2; 1997-139, ss. 1, 2; 1998-98, ss. 36, 69; 1999-389, ss. 2, 5, 6;

2001-476, s. 19(a); 2003-284, s. 35A.1; 2003-415, ss. 1, 2; 2003-416, s. 4(c);

2004-170, s. 14; 2006-40, s. 2; 2007-461, s. 1.)

§ 105-129.36. Credit for rehabilitating nonincome-producing historic structure.

(a) Credit. – A taxpayer who is not allowed a federal income tax credit under section 47

of the Code and who makes rehabilitation expenses for a State-certified historic structure located

in this State is allowed a credit equal to thirty percent (30%) of the rehabilitation expenses. If the

certified historic structure is a facility that at one time served as a State training school for

juvenile offenders, the amount of the credit is equal to forty percent (40%) of the expenditures

that qualify for the federal credit. To qualify for the credit, the taxpayer's rehabilitation expenses

must exceed twenty-five thousand dollars ($25,000) within a 24-month period. To claim the

credit allowed by this subsection, the taxpayer must provide a copy of the certification obtained

from the State Historic Preservation Officer verifying that the historic structure has been

rehabilitated in accordance with this subsection.

(b) Definitions. – The following definitions apply in this section:

(1) Certified rehabilitation. – Repairs or alterations consistent with the Secretary

of the Interior's Standards for Rehabilitation and certified as such by the State

Historic Preservation Officer.

(2) Rehabilitation expenses. – Expenses incurred in the certified rehabilitation of

a certified historic structure and added to the property's basis. The term does

not include the cost of acquiring the property, the cost attributable to the

enlargement of an existing building, the cost of sitework expenditures, or the

cost of personal property.

(3) State-certified historic structure. – A structure that is individually listed in the

National Register of Historic Places or is certified by the State Historic

Preservation Officer as contributing to the historic significance of a National

Register Historic District or a locally designated historic district certified by

the United States Department of the Interior.


(4) State Historic Preservation Officer. – The Deputy Secretary of Archives and

History or the Deputy Secretary's designee who acts to administer the historic

preservation programs within the State.

(c) Recodified as G.S. 105-129.36A by Session Laws 2003-284, s. 35A.2, effective July

15, 2003. (1993, c. 527, ss. 1, 2; 1997-139, ss. 1, 2; 1998-98, ss. 36, 69; 1999-389, ss. 3, 5, 6;

2002-159, s. 35(e); 2003-284, ss. 35A.2, 35A.3; 2006-40, ss. 3, 4.)

§ 105-129.36A. (See note for repeal) Rules; fees.

(a) Rules. – The North Carolina Historical Commission, in consultation with the State

Historic Preservation Officer, may adopt rules needed to administer the certification process

required by this section.

(b) Fees. – The North Carolina Historical Commission, in consultation with the State

Historic Preservation Officer, may adopt a schedule of fees for providing certifications required

by this Article. In establishing the fee schedule, the Commission shall consider the

administrative and personnel costs incurred by the Department of Natural and Cultural

Resources. An application fee may not exceed one percent (1%) of the completed qualifying

rehabilitation expenditures. The proceeds of the fees are receipts of the Department of Natural

and Cultural Resources and must be used for performing its duties under this Article. (1993, c.

527, ss. 1, 2; 1997-139, ss. 1, 2; 1998-98, ss. 36, 69; 1999-389, ss. 3, 5, 6; 2002-159, s. 35(e);

2003-284, s. 35A.2; 2015-241, s. 14.30(s).)

§ 105-129.37. Tax credited; credit limitations.

(a) Tax Credited. – The credits provided in this Article are allowed against the income

taxes levied in Article 4 of this Chapter.

(b) Credit Limitations. – The entire credit may not be taken for the taxable year in which

the property is placed in service but must be taken in five equal installments beginning with the

taxable year in which the property is placed in service. Any unused portion of the credit may be

carried forward for the succeeding five years. A credit allowed under this Article may not exceed

the amount of the tax against which it is claimed for the taxable year reduced by the sum of all

credits allowed, except payments of tax made by or on behalf of the taxpayer.

(c) Forfeiture for Disposition. – A taxpayer who is required under section 50 of the Code

to recapture all or part of the federal credit for rehabilitating an income-producing historic

structure located in this State forfeits the corresponding part of the State credit allowed under

G.S. 105-129.35 with respect to that historic structure. If the credit was allocated among the

owners of a pass-through entity, the forfeiture applies to the owners in the same proportion that

the credit was allocated.

(d) Forfeiture for Change in Ownership. – If an owner of a pass-through entity that has

qualified for the credit allowed under G.S. 105-129.35 disposes of all or a portion of the owner's

interest in the pass-through entity within five years from the date the rehabilitated historic

structure is placed in service and the owner's interest in the pass-through entity is reduced to less

than two-thirds of the owner's interest in the pass-through entity at the time the historic structure

was placed in service, the owner forfeits a portion of the credit. The amount forfeited is

determined by multiplying the amount of credit by the percentage reduction in ownership and

then multiplying that product by the forfeiture percentage. The forfeiture percentage equals the

recapture percentage found in the table in section 50(a)(1)(B) of the Code. The remaining

allowable credit is allocated equally among the five years in which the credit is claimed.


(e) Exceptions to Forfeiture. – Forfeiture as provided in subsection (d) of this section is

not required if the change in ownership is the result of any of the following:

(1) The death of the owner.

(2) A merger, consolidation, or similar transaction requiring approval by the

shareholders, partners, or members of the taxpayer under applicable State law,

to the extent the taxpayer does not receive cash or tangible property in the

merger, consolidation, or other similar transaction.

(f) Liability From Forfeiture. – A taxpayer or an owner of a pass-through entity that

forfeits a credit under this section is liable for all past taxes avoided as a result of the credit plus

interest at the rate established under G.S. 105-241.21, computed from the date the taxes would

have been due if the credit had not been allowed. The past taxes and interest are due 30 days

after the date the credit is forfeited. A taxpayer or owner of a pass-through entity that fails to pay

the taxes and interest by the due date is subject to the penalties provided in G.S. 105-236. (1993,

c. 527, ss. 1, 2; 1997-139, ss. 1, 2; 1998-98, ss. 36, 69; 1999-389, ss. 4, 5, 6; 2007-491, s.

44(1)a.)

§ 105-129.38. (See note for repeal) Report.


following information itemized by taxpayer:


(2) The amount of rehabilitation expenses and qualified rehabilitation

expenditures with respect to which credits were taken.

(3) The total cost to the General Fund of the credits taken. (2005-429, s. 2.5;

2010-166, s. 1.4.)

§ 105-129.39. Sunset.

This Article expires for qualified rehabilitation expenditures and rehabilitation expenses

incurred on or after January 1, 2015. (2010-166, s. 1.5; 2012-36, s. 12(a).)

Article 3E.

Low-Income Housing Tax Credits.

(See Editor's note for repeal of this Article.)

§ 105-129.40. (See Editor's note for repeal) Scope and definitions.

(a) Scope. – G.S. 105-129.41 applies to buildings that are awarded a federal credit

allocation before January 1, 2003. G.S. 105-129.42 applies to buildings that are awarded a

federal credit allocation on or after January 1, 2003.

(b) Definitions. – The definitions in section 42 of the Code and the following definitions

apply in this Article:

(1) Housing Finance Agency. – The North Carolina Housing Finance Agency

established in G.S. 122A-4.

(2) Pass-through entity. – Defined in G.S. 105-228.90. (2002-87, s. 1; 2003-416,

s. 3.)


§ 105-129.41. (See note for repeal) Credit for low-income housing awarded a federal credit

allocation before January 1, 2003.

(a) Credit. – A taxpayer that is allowed for the taxable year a federal income tax credit

for low-income housing under section 42 of the Code with respect to a qualified North Carolina

low-income building, is allowed a credit under this Article equal to a percentage of the total

federal credit allowed with respect to that building. For the purposes of this section, the total

federal credit allowed is the total allowed during the 10-year federal credit period plus the

disallowed first-year credit allowed in the 11th year. For the purposes of this section, the total

federal credit is calculated based on qualified basis as of the end of the first year of the credit

period and is not recalculated to reflect subsequent increases in qualified basis. For buildings that

meet condition (c)(1) or (c)(1a) of this section, the credit percentage is seventy-five percent

(75%). For other buildings, the credit percentage is twenty-five percent (25%).

(a1) Tax Election. – The credit allowed in this section is allowed against the franchise tax

levied in Article 3 of this Chapter, the income taxes levied in Article 4 of this Chapter, or the

gross premiums tax levied in Article 8B of this Chapter. The taxpayer must elect the tax against

which the credit will be claimed when filing the return on which the first installment of the credit

is claimed. This election is binding. Any carryforwards of the credit must be claimed against the

same tax.

(a2) Cap. – The credit allowed in this section may not exceed fifty percent (50%) of the

tax against which it is claimed for the taxable year, reduced by the sum of all other credits made

by or on behalf of the taxpayer. This limitation applies to the cumulative amount of credit,

including carryforwards, claimed by the taxpayer under this section against each tax for the

taxable year. Any unused portion of the credit may be carried forward for the succeeding five

years.

(b) Timing. – The credit must be taken in equal installments over the five years

beginning in the first taxable year in which the federal credit is claimed for that building. During

the first taxable year in which the credit allowed under this section may be taken with respect to

a building, the amount of the installment must be multiplied by the applicable fraction under

section 42(f)(2)(A) of the Code. Any reduction in the amount of the first installment as a result of

this multiplication is carried forward and may be taken in the first taxable year after the fifth

installment is allowed under this section.

(b1) Allocation. – Notwithstanding the provisions of G.S. 105-131.8 and G.S. 105-269.15,

a pass-through entity that qualifies for the credit provided in this section may allocate the credit


entity, as determined under the Code at the end of the taxable year in which the federal credit is

first claimed, is at least forty percent (40%) of the amount of credit allocated to that owner.

Owners to whom a credit is allocated are allowed the credit as if they had qualified for the credit

directly. A pass-through entity and its owners must include with their tax returns for every

taxable year in which an allocated credit is claimed a statement of the allocation made by the

pass-through entity and the allocation that would have been required under G.S. 105-131.8 or

G.S. 105-269.15.

(c) Qualifying Buildings. – As used in this section the term "qualified North Carolina

low-income building" means a qualified low-income building that was allocated a federal credit

under section 42(h)(1) of the Code, was not allowed a federal credit under section 42(h)(4) of the

Code, and meets any of the following conditions:


(1) It is located in an area that, at the time the federal credit is allocated to the

building, is a tier one or two enterprise area, as defined in G.S. 105-129.3.

(1a) Expired pursuant to Session Laws 2000-56, s. 10(f), effective January 1, 2005.


building, is a tier three or four enterprise area, and forty percent (40%) of its

residential units are both rent-restricted and occupied by individuals whose

income is fifty percent (50%) or less of area median gross income as defined

in the Code.


building, is a tier five enterprise area, and forty percent (40%) of its residential

units are both rent-restricted and occupied by individuals whose income is

thirty-five percent (35%) or less of area median gross income as defined in the

Code.

(d) Expiration. – If, in one of the five years in which an installment of the credit under

this section accrues, the taxpayer is no longer eligible for the corresponding federal credit with

respect to the same qualified North Carolina low-income building, then the credit under this

section expires and the taxpayer may not take any remaining installment of the credit. If, in one

of the five years in which an installment of the credit under this section accrues, the building no

longer qualifies as a low-income building under subdivision (2) or (3) of subsection (c) of this

section because less than forty percent (40%) of its residential units are both rent-restricted and

occupied by individuals who meet the income requirements, then the credit under this section

expires and the taxpayer may not take any remaining installments of the credit. The taxpayer

may, however, take the portion of an installment that accrued in a previous year and was carried


(e) Forfeiture for Disposition. – If the taxpayer is required under section 42(j) of the

Code to recapture all or part of a federal credit under that section with respect to a qualified

North Carolina low-income building, the taxpayer must report the recapture event to the

Secretary and to the Housing Finance Agency. The taxpayer forfeits the corresponding part of

the credit allowed under this section with respect to that qualified North Carolina low-income

building. If the credit was allocated among the owners of a pass-through entity, the forfeiture

applies to the owners in the same proportion that the credit was allocated. This subsection does

not apply when the recapture of part or all of the federal credit is the result of an event that

occurs after the credit period described in subsection (b) of this section.

(f) Forfeiture for Change in Ownership. – If an owner of a pass-through entity that has

qualified for the credit allowed under this section disposes of all or a portion of the owner's

interest in the pass-through entity within five years from the date the federal credit is first

claimed and the owner's interest in the pass-through entity is reduced to less than two-thirds of

the owner's interest in the pass-through entity at the time the federal credit is first claimed, the

owner must report the change to the Secretary and to the Housing Finance Agency. The owner

forfeits a portion of the credit. The amount forfeited is determined by multiplying the amount of

credit by the percentage reduction in ownership and then multiplying that product by the

forfeiture percentage. The forfeiture percentage equals the recapture percentage found in the

table in section 50(a)(1)(B) of the Code. The remaining allowable credit is allocated equally

among the five years in which the credit is claimed. Forfeiture as provided in this subsection is








(g) Liability From Forfeiture. – A taxpayer or an owner of a pass-through entity that





the taxes and interest by the due date is subject to the penalties provided in G.S. 105-236.

(1999-360, s. 11; 2000-56, s. 7; 2000-140, s. 88; 2001-431, s. 2; 2002-87, s. 2; 2003-416, s. 1;

2007-491, s. 44(1)a.)

§ 105-129.42. (See note for repeal) Credit for low-income housing awarded a federal credit

allocation on or after January 1, 2003.


(1) Qualified Allocation Plan. – The plan governing the allocation of federal

low-income housing tax credits for a particular year, as approved by the

Governor after a public hearing and publication in the North Carolina

Register.

(2) Qualified North Carolina low-income housing development. – A qualified

low-income project or building that is allocated a federal tax credit under

section 42(h)(1) of the Code and is described in subsection (c) of this section.

(3) Qualified residential unit. – A housing unit that meets the requirements of

section 42 of the Code.

(b) Credit. – A taxpayer who is allocated a federal low-income housing tax credit under

section 42 of the Code to construct or substantially rehabilitate a qualified North Carolina

low-income housing development is allowed a credit equal to a percentage of the development's

qualified basis, as determined pursuant to section 42 of the Code. For the purpose of this section,

qualified basis is calculated based on the information contained in the carryover allocation and is

not recalculated to reflect subsequent increases or decreases. No credit is allowed for a

development that uses tax-exempt bond financing.

(c) Developments and Amounts. – The following table sets out the housing developments

that are qualified North Carolina low-income housing developments and are allowed a credit

under this section. The table also sets out the percentage of the development's qualified basis for

which a credit is allowed. The designation of a county or city as Low Income, Moderate Income,

or High Income and determinations of affordability are made by the Housing Finance Agency in

accordance with the Qualified Allocation Plan in effect as of the time the federal credit is

allocated. A change in the income designation of a county or city after a federal credit is

allocated does not affect the percentage of the developer's qualified basis for which a credit is

allowed. The affordability requirements set out in the chart apply for the duration of the federal

tax credit compliance period. If in any year a taxpayer fails to meet these affordability

requirements, the credit is forfeited under subsection (h) of this section.

Percentage of

Basis for

Type of Development Which Credit


is Allowed

Forty percent (40%) of the qualified residential units

are affordable to households whose income is fifty Thirty percent

percent (50%) or less of area median income and the (30%)

units are in a Low-Income county or city.

Fifty percent (50%) of the qualified residential units

are affordable to households whose income is fifty Twenty percent

percent (50%) or less of the area median income and (20%)

the units are in a Moderate-Income county or city.

Fifty percent (50%) of the qualified residential units

are affordable to households whose income is forty Ten percent

percent (40%) or less of the area median income and (10%)

the units are in a High-Income county or city.

Twenty-five percent (25%) of the qualified residential

units are affordable to households whose income is Ten percent

thirty percent (30%) or less of the area median income (10%)

and the units are in a High-Income county or city.

(d) Election. – When a taxpayer to whom a federal low-income housing credit is

allocated submits to the Housing Finance Agency a request to receive a carryover allocation for

that credit, the taxpayer must elect a method for receiving the tax credit allowed by this section.

A taxpayer may elect to receive the credit in the form of either a direct tax refund or a loan

generated by transferring the credit to the Housing Finance Agency. Neither a direct tax refund

nor a loan received as the result of the transfer of the credit is considered taxable income under

this Chapter.

Under the direct tax refund method, a taxpayer elects to apply the credit allowed by this

section to the taxpayer's liability under Article 4 of this Chapter. If the credit allowed by this

section exceeds the amount of tax imposed by Article 4 for the taxable year, reduced by the sum

of all other credits allowable, the Secretary must refund the excess. In computing the amount of

tax against which multiple credits are allowed, nonrefundable credits are subtracted before this

credit. The provisions that apply to an overpayment of tax apply to the refundable excess of a

credit allowed under this section.

Under the loan method, a taxpayer elects to transfer the credit allowed by this section to the

Housing Finance Agency and receive a loan from that Agency for the amount of the credit. The

terms of the loan are specified by the Housing Finance Agency in accordance with the Qualified

Allocation Plan.

(e) Exception When No Carryover. – If a taxpayer does not submit to the Housing

Finance Agency a request to receive a carryover allocation, the taxpayer must elect the method

for receiving the credit allowed by this section when the taxpayer submits to the Agency federal

Form 8609. A taxpayer to whom this subsection applies claims the credit for the taxable year in

which the taxpayer submits federal Form 8609.

(f) Pass-Through Entity. – Notwithstanding the provisions of G.S. 105-131.8 and G.S.

105-269.15, a pass-through entity that qualifies for the credit provided in this Article does not


distribute the credit among any of its owners. The pass-through entity is considered the taxpayer

for purposes of claiming the credit allowed by this Article. If a return filed by a pass-through

entity indicates that the entity is paying tax on behalf of the owners of the entity, the credit

allowed under this Article does not affect the entity's payment of tax on behalf of its owners.

(g) Return and Payment. – A taxpayer may claim the credit allowed by this section on a

return filed for the taxable year in which the taxpayer receives a carryover allocation of a federal

low-income housing credit. The return must state the name and location of the qualified

low-income housing development for which the credit is claimed.

If a taxpayer chooses the loan method for receiving the credit allowed under this section, the

Secretary must transfer to the Housing Finance Agency the amount of credit allowed the

taxpayer. The Agency must loan the taxpayer the amount of the credit on terms consistent with

the Qualified Allocation Plan. The Housing Finance Agency is not required to make a loan to a

qualified North Carolina low-income housing development until the Secretary transfers the credit

amount to the Agency.

If the taxpayer chooses the direct tax refund method for receiving the credit allowed under

this section, the Secretary must transfer to the Housing Finance Agency the refundable excess of

the credit allowed the taxpayer. The Agency holds the refund due the taxpayer in escrow, with no

interest accruing to the taxpayer during the escrow period. The Agency must release the refund

to the taxpayer upon the occurrence of the earlier of the following:

(1) The Agency determines that the taxpayer has complied with the Qualified

Allocation Plan and has completed at least fifty percent (50%) of the activities

included in the development's qualified basis.

(2) Within 30 days after the date the development is placed in service.

(h) Forfeiture. – A taxpayer that receives a credit under this section must immediately

report any recapture event under section 42 of the Code to the Housing Finance Agency. If the

taxpayer or any of its owners are required under section 42(j) of the Code to recapture all or part

of a federal credit with respect to a qualified North Carolina low-income development, the

taxpayer forfeits the corresponding part of the credit allowed under this section. This requirement

does not apply in the following circumstances:

(1) When the recapture of part or all of the federal credit is the result of an event

that occurs in the sixth or a subsequent calendar year after the calendar year in

which the development was awarded a federal credit allocation.

(2) The taxpayer elected to transfer the credit allowed by this section to the

Housing Finance Agency.

(i) Liability From Forfeiture. – A taxpayer that forfeits all or part of the credit allowed

under this section is liable for all past taxes avoided and any refund claimed as a result of the

credit plus interest at the rate established under G.S. 105-241.21. The interest is computed from

the date the Secretary transferred the credit amount to the Housing Finance Agency. The past

taxes, refund, and interest are due 30 days after the date the credit is forfeited. A taxpayer that

fails to pay the taxes, refund, and interest by the due date is subject to the penalties provided in

G.S. 105-236. (2002-87, s. 1; 2003-416, ss. 6-8; 2004-110, s. 4.2; 2007-491, s. 44(1)a.)

§ 105-129.43. (See Editor's note for repeal) Substantiation.

A taxpayer allowed a credit under this Article must maintain and make available for

inspection any information or records required by the Secretary of Revenue or the Housing


Finance Agency. The burden of proving eligibility for a credit and the amount of the credit rests

upon the taxpayer. (2002-87, s. 1.)

§ 105-129.44. (See note for repeal) Report.



(1) The number of taxpayers that took the credit allowed in this Article.

(2) The location of each qualified North Carolina low-income building or housing

development for which a credit was taken.

(3) The total cost to the General Fund of the credits taken. (2002-87, s. 1;

2005-429, s. 2.6; 2010-166, s. 1.6.)

§ 105-129.45. Sunset.

This Article is repealed effective January 1, 2015. The repeal applies to developments to

which federal credits are allocated on or after January 1, 2015. (2002-87, s. 1; 2004-110, s. 4.1;

2008-107, s. 28.3(a).)





Article 3F.

Research and Development.

§ 105-129.50. (See note for repeal) Definitions.

The definitions in section 41 of the Code apply in this Article. In addition, the following

definitions apply in this Article:

(1) Development tier one area. – Defined in G.S. 143B-437.08.

(2) Full-time job. – Defined in G.S. 105-129.81.

(3) Reserved.

(4) North Carolina university research expenses. – Any amount the taxpayer paid

or incurred to a research university for qualified research performed in this

State or basic research performed in this State.

(4a) (Repealed effective for taxable years beginning on or after January 1, 2014)

Participating community college. – A community college, as defined in G.S.

115D-2, that offers an associate in applied science degree in simulation and

game development.

(5) Period of measurement. – Defined in the Small Business Size Regulations of

the federal Small Business Administration.

(6) Qualified North Carolina research expenses. – Qualified research expenses,

other than North Carolina university research expenses, for research

performed in this State.


(7) Receipts. – Defined in the Small Business Size Regulations of the federal

Small Business Administration.

(8) Related person. – Defined in G.S. 105-163.010.

(9) Research university. – An institution of higher education that meets one or

both of the following conditions:

a. It is classified as one of the following in the most recent edition of "A

Classification of Institutions of Higher Education", the official report

of The Carnegie Foundation for the Advancement of Teaching:

1. Doctoral/Research Universities, Extensive or Intensive.

2. Masters Colleges and Universities, I or II.

3. Baccalaureate Colleges, Liberal Arts or General.

b. It is a constituent institution of The University of North Carolina.

(10) Small business. – A business whose annual receipts, combined with the

annual receipts of all related persons, for the applicable period of

measurement did not exceed one million dollars ($1,000,000). (2004-124, s.

32D.2; 2010-147, s. 3.2; 2011-330, s. 4; 2013-316, s. 2.3(b).)

§ 105-129.51. (See note for repeal) Taxpayer standards and sunset.

(a) A taxpayer is eligible for a credit allowed in this Article if it satisfies the requirements

of G.S. 105-129.83(c), (d), (e), (f), and (g) relating to wage standard, health insurance,

environmental impact, safety and health programs, and overdue tax debts, respectively.

(b) This Article is repealed for taxable years beginning on or after January 1, 2016.

(c) Repealed by Session Laws 2004-124, s. 32D.4, effective for taxable years beginning

on or after January 1, 2006. (2004-124, ss. 32D.2, s. 32D.4; 2006-252, s. 2.20; 2008-107, s.

28.2(a); 2010-147, s. 3.3; 2013-316, s. 2.3(c).)

§ 105-129.52. (See note for repeal) Tax election; cap.

(a) Tax Election. – A credit allowed in this Article is allowed against the franchise tax

levied in Article 3 of this Chapter or the income taxes levied in Article 4 of this Chapter. The

taxpayer must elect the tax against which a credit will be claimed when filing the return on

which the credit is first claimed. This election is binding. Any carryforwards of a credit must be

claimed against the same tax.

(b) Cap. – A credit allowed in this Article may not exceed fifty percent (50%) of the

amount of tax against which it is claimed for the taxable year, reduced by the sum of all other

credits allowed against that tax, except tax payments made by or on behalf of the taxpayer. This

limitation applies to the cumulative amount of credit, including carryforwards, claimed by the

taxpayer under this Article against each tax for the taxable year. Any unused portion of a credit

allowed in this Article may be carried forward for the succeeding 15 years. (2004-124, s. 32D.2;

2010-96, s. 40.3; 2010-147, s. 3.4.)

§ 105-129.53. (See notes) Substantiation.


by the Secretary. Every taxpayer claiming a credit under this Article must maintain and make

available for inspection by the Secretary any records the Secretary considers necessary to

determine and verify the amount of the credit to which the taxpayer is entitled. The burden of

proving eligibility for a credit and the amount of the credit rests upon the taxpayer, and no credit


may be allowed to a taxpayer that fails to maintain adequate records or to make them available

for inspection. (2004-124, s. 32D.2.)

§ 105-129.54. Report.


following information itemized by credit and by taxpayer:

(1) (Effective for taxable years beginning before January 1, 2014) The number

of taxpayers that took a credit allowed in this Article. The credit allowed

under G.S. 105-129.55 must be itemized by the categories of small business,

low-tier, university research, Eco-Industrial Park, and other. The credit

allowed under G.S. 105-129.56 must be itemized by the categories of higher

education collaboration and other.

(1) (Effective for taxable years beginning on or after January 1, 2014) The

number of taxpayers that took a credit allowed in this Article, itemized by the

categories of small business, low-tier, university research, Eco-Industrial Park,

and other.

(2) The amount of each credit taken in each category.

(3) The total cost to the General Fund of the credits taken. (2004-124, s. 32D.2;

2005-429, s. 2.7; 2010-147, s. 3.5; 2010-166, s. 1.7; 2013-316, s. 2.3(d).)

§ 105-129.55. (See note for repeal) Credit for North Carolina research and development.

(a) Qualified North Carolina Research Expenses. – A taxpayer that has qualified North

Carolina research expenses for the taxable year is allowed a credit equal to a percentage of the

expenses, determined as provided in this section. Only one credit is allowed under this section

with respect to the same expenses. If more than one subdivision of this section applies to the

same expenses, then the credit is equal to the higher percentage, not both percentages combined.

If part of the taxpayer's qualified North Carolina research expenses qualifies under more than one

subdivision of this section, the applicable percentages apply separately to each part of the

expenses.

(1) Small business. – If the taxpayer was a small business as of the last day of the

taxable year, the applicable percentage is three and one-quarter percent

(3.25%).

(2) Low-tier research. – For expenses with respect to research performed in a

development tier one area, the applicable percentage is three and one-quarter

percent (3.25%).

(2a) University research. – For North Carolina university research expenses, the

applicable percentage is twenty percent (20%).

(2b) Eco-Industrial Park. – For expenses with respect to research performed in an

Eco-Industrial Park certified under G.S. 143B-437.08, the applicable

percentage is thirty-five percent (35%).

(3) Other research. – For expenses not covered under another subdivision of this

section, the percentages provided in the table below apply to the taxpayer's

qualified North Carolina research expenses during the taxable year at the

following levels:

Expenses Over Up To Rate

-0- $50 million 1.25%


$50 million $200 million 2.25%

$200 million – 3.25%

(b) Repealed by Session Laws 2010-147, s. 5.5, effective January 1, 2011. (2004-124, s.

32D.2; 2006-252, s. 2.1; 2007-323, s. 31.8(a); 2010-147, s. 5.5.)

§ 105-129.56. (Repealed effective for taxable years beginning on or after January 1, 2014)

Interactive digital media.

(a) IDM Defined. – Interactive digital media is a product that meets all of the following

requirements:

(1) It is produced for distribution on electronic media, including distribution by

file download over the Internet.

(2) It contains a computer-controlled virtual universe with which an individual

who uses the program may interact in order to achieve a goal.

(3) It contains a significant amount of at least three of the following five types of

data: animated images, fixed images, sound, text, and 3D geometry.

(b) Credit. – A taxpayer that develops in this State interactive digital media or a digital

platform or engine for use in interactive digital media is allowed a credit equal to a percentage of

the taxpayer's expenses that exceed fifty thousand dollars ($50,000) and that are paid during the

taxable year in developing the media, platform, or engine. The percentage that applies to the

expenses is determined under subsection (c) of this section. The expenses to which the credit

applies are as follows:

(1) Compensation and wages for a full-time job on which withholding payments

are remitted to the Department under Article 4A of this Chapter.

(2) Employee fringe contributions on compensation and wages included under

subdivision (1) of this subsection, including health, pension, and welfare

contributions.

(3) Amounts paid to a participating community college or a research university

for services performed in this State.

(c) Percentage. – The percentage of the credit allowed under this section is as follows:

(1) Higher education collaboration. – Twenty percent (20%) for allowable

expenses paid to a participating community college or a research university.

(2) Other. – Fifteen percent (15%) for allowable expenses not covered in

subdivision (1) of this subsection.

(d) Limitations. – The amount of credit allowed a taxpayer under this section may not

exceed seven million five hundred thousand dollars ($7,500,000). The credit allowed by this

section does not apply to interactive digital media that meets any of the following descriptions:

(1) It is developed by the taxpayer for internal use.

(2) It is an interpersonal communications service, such as videoconferencing,

wireless telecommunications, a text-based channel, or a chat room.

(3) It is an Internet site that is primarily static and primarily designed to provide

information about one or more persons, businesses, companies, or firms.

(4) It is a gambling or casino game.

(5) It is political advertising.

(6) It contains material that is obscene, as defined in G.S. 14-190.1, or that is

harmful to minors, as defined in G.S. 14-190.13.


(e) No Double Benefit. – A taxpayer that claims a credit under this section may not claim

any of the following with respect to the expenses used to determine the credit under this section:

(1) A credit allowed under any other section of this Chapter.

(2) A grant from the Job Development Investment Grant Program, set out in Part

2G of Article 10 of Chapter 143B of the General Statutes.

(3) A grant from the One North Carolina Fund, set out in Part 2H of Article 10 of

Chapter 143B of the General Statutes. (2010-147, s. 3.6; 2013-316, s. 2.3(b).)




Article 3G.

Tax Incentives for Major Computer Manufacturing Facilities.

§ 105-129.60: Repealed by Session Laws 2010-166, s. 2.2, effective July 1, 2010.






§ 105-129.65A: Repealed by Session Laws 2010-166, s. 2.2, effective July 1, 2010.





Article 3H.

Mill Rehabilitation Tax Credit.

(See G.S. 105-129.75 for repeal of this Article.)

§ 105-129.70. (See note for repeal) Definitions.




(2) Certified rehabilitation. – Defined in G.S. 105-129.36.

(3) Cost certification. – The certification obtained by the State Historic

Preservation Officer from the taxpayer of the amount of the qualified

rehabilitation expenditures or the rehabilitation expenses incurred with respect

to a certified rehabilitation of an eligible site.

(3a) Development tier area. – Defined in G.S. 143B-437.08.

(4) Eligibility certification. – The certification obtained from the State Historic

Preservation Officer that the applicable facility comprises an eligible site.

(5) Eligible site. – A site located in this State that satisfies all of the following

conditions:

a. It was used as a manufacturing facility or for purposes ancillary to

manufacturing, as a warehouse for selling agricultural products, or as a

public or private utility.

b. It is a certified historic structure or a State-certified historic structure.

c. It has been at least eighty percent (80%) vacant for a period of at least

two years immediately preceding the date the eligibility certification is

made.

d. Repealed by Session Laws 2008-107, s. 28.4(a), effective for taxable

years beginning on or after January 1, 2008.

(6) Repealed by Session Laws 2006-252, s. 2.22, effective January 1, 2007.



(9) Rehabilitation expenses. – Defined in G.S. 105-129.36.

(10) State-certified historic structure. – Defined in G.S. 105-129.36.

(11) State Historic Preservation Officer. – Defined in G.S. 105-129.36. (2006-40,

s. 1; 2006-252, s. 2.22; 2008-107, s. 28.4(a).)

§ 105-129.71. (See note for repeal) Credit for income-producing rehabilitated mill

property.

(a) Credit. – A taxpayer who is allowed a credit under section 47 of the Code for making

qualified rehabilitation expenditures of at least three million dollars ($3,000,000) with respect to

a certified rehabilitation of an eligible site is allowed a credit equal to a percentage of the

expenditures that qualify for the federal credit. The credit may be claimed in the year in which

the eligible site is placed into service. When the eligible site is placed into service in two or more

phases in different years, the amount of credit that may be claimed in a year is the amount based

on the qualified rehabilitation expenditures associated with the phase placed into service during

that year. In order to be eligible for a credit allowed by this Article, the taxpayer must provide to

the Secretary a copy of the eligibility certification and the cost certification. The amount of the

credit is as follows:

(1) For an eligible site located in a development tier one or two area, determined

as of the date of the eligibility certification, the amount of the credit is equal to

forty percent (40%) of the qualified rehabilitation expenditures.

(2) For an eligible site located in a development tier three area, determined as of

the date of the eligibility certification, the amount of the credit is equal to

thirty percent (30%) of the qualified rehabilitation expenditures.


(b) Allocation. – Notwithstanding the provisions of G.S. 105-131.8 and G.S. 105-269.15,



entity, as determined under the Code, at the end of the taxable year in which the eligible site is

placed in service, is at least forty percent (40%) of the amount of credit allocated to that owner.





G.S. 105-269.15.

(c) Forfeiture for Change in Ownership. – If an owner of a pass-through entity that has


interest in the pass-through entity within five years from the date the eligible site is placed in

service and the owner's interest in the pass-through entity is reduced to less than two-thirds of the

owner's interest in the pass-through entity at the time the eligible site was placed in service, the

owner forfeits a portion of the credit. The amount forfeited is determined by multiplying the

amount of credit by the percentage reduction in ownership and then multiplying that product by

the forfeiture percentage. The forfeiture percentage equals the recapture percentage found in the

table in section 50(a)(1)(B) of the Code.

(d) Exceptions to Forfeiture. – Forfeiture as provided in subsection (c) of this section is







(e) Liability from Forfeiture. – A taxpayer or an owner of a pass-through entity that






(2006-40, s. 1; 2006-252, s. 2.23; 2006-259, s. 47.5; 2007-491, s. 44(1)a; 2008-107, s. 28.4(b).)

§ 105-129.72. (See note for repeal) Credit for nonincome-producing rehabilitated mill

property.


of the Code and who makes rehabilitation expenses of at least three million dollars ($3,000,000)

with respect to a certified rehabilitation of an eligible site is allowed a credit equal to a

percentage of the rehabilitation expenses. The entire credit may not be taken for the taxable year

in which the property is placed in service, but must be taken in five equal installments beginning

with the taxable year in which the property is placed in service. When the eligible site is placed

into service in two or more phases in different years, the amount of credit that may be claimed in

a year is the amount based on the rehabilitation expenses associated with the phase placed into

service during that year. In order to be eligible for a credit allowed by this Article, the taxpayer

must provide to the Secretary a copy of the eligibility certification and the cost certification. For


an eligible site located in a development tier one or two area, determined as of the date of the

eligibility certification, the amount of the credit is equal to forty percent (40%) of the

rehabilitation expenses. No credit is allowed for a site located in a development tier three area.

(b) Allocation. – Notwithstanding the provisions of G.S. 105-131.8 and G.S. 105-269.15,



entity, as determined under the Code, at the end of the taxable year in which the eligible site is

placed in service, is at least forty percent (40%) of the amount of credit allocated to that owner.





G.S. 105-269.15.

(c) Forfeiture for Change in Ownership. – If an owner of a pass-through entity that has


interest in the pass-through entity within five years from the date the eligible site is placed in

service and the owner's interest in the pass-through entity is reduced to less than two-thirds of the

owner's interest in the pass-through entity at the time the eligible site was placed in service, the

owner forfeits a portion of the credit. The amount forfeited is determined by multiplying the

amount of credit by the percentage reduction in ownership and then multiplying that product by

the forfeiture percentage. The forfeiture percentage equals the recapture percentage found in the

table in section 50(a)(1)(B) of the Code. The remaining allocable credit is allocated equally

among the five years in which the credit is claimed.

(d) Exceptions to Forfeiture. – Forfeiture as provided in subsection (c) of this section is







(e) Liability from Forfeiture. – A taxpayer or an owner of a pass-through entity that






(2006-40, s. 1; 2006-252, s. 2.24; 2007-491, s. 44(1)a; 2008-107, s. 28.4(c).)

§ 105-129.73. (See note for repeal) Tax credited; cap.

(a) Taxes Credited. – The credits allowed by this Article may be claimed against the

franchise tax imposed under Article 3 of this Chapter, the income taxes imposed under Article 4

of this Chapter, or the gross premiums tax imposed under Article 8B of this Chapter. The

taxpayer may take the credits allowed by this Article against only one of the taxes against which

it is allowed. The taxpayer must elect the tax against which a credit will be claimed when filing

the return on which it is claimed. This election is binding. Any carryforwards of the credit must

be claimed against the same tax.


(b) Cap. – A credit allowed under this Article may not exceed the amount of the tax

against which it is claimed for the taxable year reduced by the sum of all credits allowed, except

payment of tax made by or on behalf of the taxpayer. Any unused portion of the credit may be

carried forward for the succeeding nine years. (2006-40, s. 1.)

§ 105-129.74. (See note for repeal) Coordination with Article 3D of this Chapter.

A taxpayer that claims a credit under this Article may not also claim a credit under Article

3D of this Chapter with respect to the same activity. The rules and fee schedule adopted under

G.S. 105-129.36A apply to this Article. (2006-40, s. 1.)

§ 105-129.75. Sunset.

This Article expires January 1, 2015, for rehabilitation projects for which an application for

an eligibility certification is submitted on or after that date. Eligibility certifications under this

Article expire January 1, 2023. (2006-40, s. 1; 2008-107, s. 28.4(d); 2010-31, s. 31.5(a);

2012-36, s. 12(b); 2015-241, s. 32.3(b).)

§ 105-129.75A. (See note for repeal) Report.






(3) The total cost to the General Fund of the credits taken. (2010-166, s. 1.8.)

Article 3I.

§ 105-129.76. Reserved for future codification purposes.


Article 3I.



Article 3J.

Tax Credits for Growing Businesses.

(SEE G.S. 105-129.82(A) FOR REPEAL OF ARTICLE.)

§ 105-129.80. (See notes) Legislative findings.

The General Assembly finds that:

(1) It is the policy of the State of North Carolina to stimulate economic activity

and to create new jobs for the citizens of the State by encouraging and


promoting the expansion of existing business and industry within the State

and by recruiting and attracting new business and industry to the State.

(2) Both short-term and long-term economic trends at the State, national, and

international levels have made the successful implementation of the State's

economic development policy and programs both more critical and more

challenging, and the decline in the State's traditional industries, and the

resulting adverse impact upon the State and its citizens, have been exacerbated

in recent years by adverse national and State economic trends that contribute

to the reduction in the State's industrial base and that inhibit the State's ability

to sustain or attract new and expanding businesses.

(3) The economic condition of the State is not static, and recent changes in the

State's economic condition have created economic distress that requires a

reevaluation of certain existing State programs and the enactment of a new

program as provided in this Article that is designed to stimulate new economic

activity and to create new jobs within the State.

(4) The enactment of this Article is necessary to stimulate the economy and create

new jobs in North Carolina, and this Article will promote the general welfare

and confer, as its primary purpose and effect, benefits on citizens throughout

the State through the creation of new jobs, an enlargement of the overall tax

base, an expansion and diversification of the State's industrial base, and an

increase in revenue to the State and its political subdivisions.

(5) The purpose of this Article is to stimulate economic activity and to create new

jobs within the State.

(6) The State is in need of a focused tax credit program that encourages and

facilitates economic growth and development within the State.

(7) The resources of the State are not evenly distributed throughout the State and

different communities have different abilities and needs in attracting and

maintaining new and expanding business and industry. (2006-252, s. 1.1.)

§ 105-129.81. (See notes) Definitions.


(1) Agrarian growth zone. – Defined in G.S. 143B-437.010.

(2) Air courier services. – Defined in G.S. 143B-437.01.

(3) Aircraft maintenance and repair. – The provision of specialized maintenance

or repair services for commercial aircraft or the rebuilding of commercial

aircraft.

(4) Business property. – Tangible personal property that is used in a business and

capitalized by the taxpayer for tax purposes under the Code.

(5) Company headquarters. – Defined in G.S. 143B-437.01.

(6) Cost. – In the case of property owned by the taxpayer, cost is determined

pursuant to regulations adopted under section 1012 of the Code. In the case of

property the taxpayer leases from another, cost is value as determined

pursuant to G.S. 105-130.4(j)(2).

(7) Customer service call center. – The provision of support service by a business

to its customers by telephone or other electronic means to support products or

services of the business. For the purposes of this definition, an establishment


is primarily engaged in providing support services by telephone or other

electronic means only if at least sixty percent (60%) of its calls are incoming

or at least sixty percent (60%) of its other electronic communications are

initiated by its customers.

(8) Development tier. – The classification assigned to an area pursuant to G.S.

143B-437.08.

(9) Electronic shopping and mail order houses. – An industry in electronic

shopping and mail order houses industry group 4541 as defined by NAICS.

(9a) Environmental disqualifying event. – Any of the following occurrences:

a. During the tax year in which the activity occurred for which a credit is

being claimed, a civil penalty was assessed against the taxpayer by the

Department of Environmental Quality for failure to comply with an

order issued by an agency of the Department to abate or remediate a

violation of any program administered by the agency.

b. During the tax year in which the activity occurred for which a credit is

being claimed or in the prior two tax years, any of the following:

1. A finding was made by the Department of Environmental

Quality that the taxpayer knowingly and willfully, as defined in

G.S. 143-215.6B, including all limitations thereto, committed a

violation of any program implemented by an agency of the

Department.

2. An assessment for damages to fish or wildlife pursuant to G.S.

143-215.3(a)(7) was made against the taxpayer.

3. A judicial order for injunctive relief was issued against the

taxpayer in connection with a violation of any program

implemented by an agency of the Department of

Environmental Quality.

c. During the tax year in which the activity occurred for which the credit

is being claimed or in the prior four tax years, a criminal penalty was

imposed on the taxpayer in connection with a violation of any program

implemented by an agency of the Department of Environmental

Quality.

(10) Establishment. – Defined in 29 C.F.R. § 1904.46, as it existed on January 1,

2002.

(11) Full-time job. – A position that requires at least 1,600 hours of work per year

and is intended to be held by one employee during the entire year. A full-time

employee is an employee who holds a full-time job.

(12) Hub. – Defined in G.S. 105-164.3.

(13) Information technology and services. – Defined in G.S. 143B-437.01.

(14) Long-term unemployed worker. – An individual that has been totally

unemployed for at least the preceding 26 consecutive weeks as evidenced by

records maintained by the Division of Employment Security (DES) of the

Department of Commerce.

(15) Manufacturing. – Defined in G.S. 143B-437.01.

(16) Motorsports facility. – A motorsports racetrack classified in the United States

racetrack national industry 711212, as defined by NAICS.


(17) Motorsports racing team. – A professional racing team primarily engaged in

the research and development, design, manufacture, repair, maintenance, and

operation of motor vehicles used in live motorsports racing events before a

paying audience.

(18) NAICS. – Defined in G.S. 105-228.90.

(19) New job. – A full-time job that represents a net increase in the number of the

taxpayer's employees statewide. A new employee is an employee who holds a

new job. The term does not include a job currently located in this State that is

transferred to the business from a related member of the business.

(20) Overdue tax debt. – Defined in G.S. 105-243.1.

(20a) (Effective for taxable years beginning on or after January 1, 2013) Port

enhancement zone. – Defined in G.S. 143B-437.013.


(22) Related member. – Defined in G.S. 105-130.7A.

(23) Research and development. – An industry in scientific research and

development services industry group 5417 as defined by NAICS.

(24) Urban progress zone. – The classification assigned to an area pursuant to G.S.

143B-437.09.

(25) Warehousing. – Defined in G.S. 143B-437.01.

(26) Wholesale trade. – Defined in G.S. 143B-437.01. (2006-252, s. 1.1;

2007-484, s. 33(b); 2010-147, s. 1.3; 2011-302, s. 6; 2011-330, s. 31(b);

2011-401, s. 5.1; 2012-79, s. 2.4; 2013-360, s. 15.18(b); 2015-241, s.

14.30(u).)

§ 105-129.82. (See notes) Sunset; studies.

(a) Sunset. – This Article is repealed effective for business activities that occur on or


(b) Equity Study. – The Department of Commerce shall study the effect of the tax

incentives provided in this Article on tax equity. This study shall include the following:

(1) Reexamining the formula in G.S. 143B-437.08 used to define development

tiers, to include consideration of alternative measures for more equitable

treatment of counties in similar economic circumstances.

(2) Considering whether the assignment of tiers and the applicable thresholds are

equitable for smaller counties.

(3) Compiling any available data on whether expanding North Carolina

businesses receive fewer benefits than out-of-State businesses that locate to

North Carolina.

(c) Impact Study. – The Department of Commerce shall study the effectiveness of the tax

incentives provided in this Article. This study shall include:

(1) Studying the distribution of tax incentives across new and expanding

businesses and industries.

(2) Examining data on economic recruitment for the period from 2005 through

the most recent year for which data are available by county, by industry type,

by size of investment, and by number of jobs, and other relevant information

to determine the pattern of business locations and expansions before and after

the enactment of this Article.


(3) Measuring the direct costs and benefits of the tax incentives.

(4) Compiling available information on the current use of incentives by other

states and whether that use is increasing or declining.

(d) Report. – The Department of Commerce shall report the results of these studies and

its recommendations to the General Assembly biennially with the first report due by June 1,

2009. (2006-252, s. 1.1; 2010-147, s. 1.1; 2012-36, s. 5.)

§ 105-129.83. Eligibility; forfeiture.

(a) Eligible Business. – A taxpayer is eligible for a credit under this Article only with

respect to activities occurring at an establishment whose primary activity is listed in this

subsection. The primary activity of an establishment is determined based on the establishment's

principal product or group of products produced or distributed, or services rendered.

(1) Air courier services hub.

(2) Aircraft maintenance and repair.

(3) Company headquarters, but only if the additional eligibility requirements of

subsection (b) of this section are satisfied.

(4) Customer service call centers.

(5) Electronic shopping and mail order houses.

(6) Information technology and services.

(7) Manufacturing.

(8) Motorsports facility.

(9) Motorsports racing team.

(10) Research and development.

(11) Warehousing.

(12) Wholesale trade.

(b) Company Headquarters Eligibility. – A taxpayer is eligible for a credit under this

Article with respect to a company headquarters only if the taxpayer creates at least 75 new jobs

at the company headquarters within a 24-month period. A taxpayer that meets this job creation

requirement is eligible for credits under this Article with respect to the company headquarters for

three taxable years beginning with the year in which the job creation requirement is satisfied. A

taxpayer that creates an additional 75 new jobs at the company headquarters in a 24-month

period during a three-year eligibility period does not qualify for any extended eligibility period.

However, a taxpayer that creates an additional 75 new jobs at the company headquarters in a

24-month period after the completion of a three-year eligibility period is eligible for credits with

respect to the company headquarters for an additional three taxable years beginning in the year in

which the additional job creation requirement is satisfied.

(c) (Effective for taxable years beginning before January 1, 2013) Wage Standard. –

A taxpayer is eligible for a credit under this Article in a development tier two or three area only

if the taxpayer satisfies a wage standard. The taxpayer is not required to satisfy a wage standard

if the activity occurs in a development tier one area. Jobs that are located within an urban

progress zone or an agrarian growth zone but not in a development tier one area satisfy the wage

standard if they pay an average weekly wage that is at least equal to ninety percent (90%) of the

lesser of the average wage for all insured private employers in the State and the average wage for

all insured private employers in the county. All other jobs satisfy the wage standard if they pay

an average weekly wage that is at least equal to the lesser of one hundred ten percent (110%) of

the average wage for all insured private employers in the State and ninety percent (90%) of the


average wage for all insured private employers in the county. The Department of Commerce

shall annually publish the wage standard for each county.

In making the wage calculation, the taxpayer shall include any jobs that were filled for at

least 1,600 hours during the calendar year the taxpayer engages in the activity that qualifies for

the credit even if those jobs are not filled at the time the taxpayer claims the credit. For a

taxpayer with a taxable year other than a calendar year, the taxpayer shall use the wage standard

for the calendar year in which the taxable year begins. Only full-time jobs are included when

making the wage calculation.

(c) (Effective for taxable years beginning on or after January 1, 2013) Wage

Standard. – A taxpayer is eligible for a credit under this Article in a development tier two or

three area only if the taxpayer satisfies a wage standard. The taxpayer is not required to satisfy a

wage standard if the activity occurs in a development tier one area. Jobs that are located within

an urban progress zone, a port enhancement zone, or an agrarian growth zone but not in a

development tier one area satisfy the wage standard if they pay an average weekly wage that is at

least equal to ninety percent (90%) of the lesser of the average wage for all insured private

employers in the State and the average wage for all insured private employers in the county. All

other jobs satisfy the wage standard if they pay an average weekly wage that is at least equal to

the lesser of one hundred ten percent (110%) of the average wage for all insured private

employers in the State and ninety percent (90%) of the average wage for all insured private

employers in the county. The Department of Commerce shall annually publish the wage standard

for each county.

In making the wage calculation, the taxpayer shall include any jobs that were filled for at

least 1,600 hours during the calendar year the taxpayer engages in the activity that qualifies for

the credit even if those jobs are not filled at the time the taxpayer claims the credit. For a

taxpayer with a taxable year other than a calendar year, the taxpayer shall use the wage standard

for the calendar year in which the taxable year begins. Only full-time jobs are included when

making the wage calculation.

(d) Health Insurance. – A taxpayer is eligible for a credit under this Article only if the

taxpayer provides health insurance for all of the full-time jobs at the establishment with respect

to which the credit is claimed when the taxpayer engages in the activity that qualifies for the

credit. For the purposes of this subsection, a taxpayer provides health insurance if it pays at least

fifty percent (50%) of the premiums for health care coverage that equals or exceeds the

minimum provisions of the basic health care plan of coverage recommended by the Small

Employer Carrier Committee pursuant to G.S. 58-50-125.

Each year that a taxpayer claims a credit or carryforward of a credit allowed under this

Article, the taxpayer shall provide with the tax return the taxpayer's certification that the taxpayer

continues to provide health insurance for all the jobs at the establishment with respect to which

the credit was claimed. If the taxpayer ceases to provide health insurance for the jobs during a

taxable year, the credit expires, and the taxpayer may not take any remaining installment or

carryforward of the credit.

(e) Environmental Impact. – A taxpayer is eligible for a credit allowed under this Article

only if the taxpayer certifies that, at the time the taxpayer claims the credit, there has not been a

final determination unfavorable to the taxpayer with respect to an environmental disqualifying

event. For the purposes of this section, a "final determination unfavorable to the taxpayer" occurs

when there is no further opportunity for the taxpayer to seek administrative or judicial appeal,

review, certiorari, or rehearing of the environmental disqualifying event and the disqualifying


event has not been reversed or withdrawn. No later than January 31 of each year, the Secretary of

Environmental Quality shall provide an annual report to the Department listing all environmental

disqualifying events for which a final determination unfavorable to the taxpayer was made in the

prior calendar year and shall provide the name of the taxpayer involved and the date that the

disqualifying event occurred.

(f) Safety and Health Programs. – A taxpayer is eligible for a credit allowed under this

Article only if the taxpayer certifies that, as of the time the taxpayer claims the credit, at the

establishment with respect to which the credit is claimed, the taxpayer has no citations under the

Occupational Safety and Health Act that have become a final order within the past three years for

willful serious violations or for failing to abate serious violations. For the purposes of this

subsection, "serious violation" has the same meaning as in G.S. 95-127. The Commissioner of

Labor shall notify the Department of Revenue annually of all employers who have had these

citations become final orders within the past three years.

(g) Overdue Tax Debts. – A taxpayer is not eligible for a credit allowed under this Article

if, at the time the taxpayer claims the credit or an installment or carryforward of the credit, the

taxpayer has received a notice of an overdue tax debt and that overdue tax debt has not been

satisfied or otherwise resolved.

(h) Expiration. – If, during the period that installments of a credit under this Article

accrue, the taxpayer is no longer engaged in one of the types of business described in subsection

(a) of this section at the establishment for which the credit was claimed, the credit expires. If,

during the period that installments of a credit under this Article accrue, the number of jobs of an

eligible company headquarters falls below the minimum number required under subsection (b) of

this section, any credit associated with that company headquarters expires. When a credit

expires, the taxpayer may not take any remaining installments of the credit. The taxpayer may,

however, take the portion of an installment that accrued in a previous year and was carried

forward to the extent permitted under G.S. 105-129.84. A change in the development tier

designation of the location of an establishment does not result in expiration of a credit under this

Article.

(i) Forfeiture. – A taxpayer forfeits a credit allowed under this Article if the taxpayer

was not eligible for the credit for the calendar year in which the taxpayer engaged in the activity

for which the credit was claimed. A taxpayer forfeits a credit previously allowed under this

Article if a final determination unfavorable to the taxpayer with respect to an environmental

disqualifying event is made that is applicable to the year in which the activity occurred for which

the credit was claimed. In addition, a taxpayer forfeits a credit for investment in real property

under G.S. 105-129.89 if the taxpayer fails to timely create the number of required new jobs or to

timely make the required level of investment under G.S. 105-129.89(b). A taxpayer that forfeits a

credit under this Article is liable for all past taxes avoided as a result of the credit plus interest at

the rate established under G.S. 105-241.21, computed from the date the taxes would have been

due if the credit had not been allowed. The past taxes and interest are due 30 days after the date

the credit is forfeited; a taxpayer that fails to pay the past taxes and interest by the due date is

subject to the penalties provided in G.S. 105-236.

(j) Change in Ownership of Business. – As used in this subsection, the term "business"

means a taxpayer or an establishment. The sale, merger, consolidation, conversion, acquisition,

or bankruptcy of a business, or any transaction by which an existing business reformulates itself

as another business, does not create new eligibility in a succeeding business with respect to

credits for which the predecessor was not eligible under this Article. A successor business may,


however, take any credit or carried-over portion of a credit that its predecessor could have taken

if it had a tax liability. The acquisition of a business is a new investment that creates new

eligibility in the acquiring taxpayer under this Article if any of the following conditions are met:

(1) The business closed before it was acquired.

(2) The business was required to file a notice of plant closing or mass layoff

under the federal Worker Adjustment and Retraining Notification Act, 29

U.S.C. § 2101, before it was acquired.

(3) The business was acquired by its employees directly or indirectly through an

acquisition company under an employee stock option transaction or another

similar mechanism. For the purpose of this subdivision, "acquired" means that

as part of the initial purchase of a business by the employees, the purchase

included an agreement for the employees through the employee stock option

transaction or another similar mechanism to obtain one of the following:

a. Ownership of more than fifty percent (50%) of the business.

b. Ownership of not less than forty percent (40%) of the business within

seven years if the business has tangible assets with a net book value in

excess of one hundred million dollars ($100,000,000) and has the

majority of its operations located in a development tier one area.

(k) Advisory Ruling. – A taxpayer may request in writing from the Secretary of Revenue

specific advice regarding eligibility for a credit under this Article. G.S. 105-264 governs the

effect of this advice. A taxpayer may not legally rely upon advice offered by any other State or

local government official or employee acting in an official capacity regarding eligibility for a

credit under this Article.

(l) (Effective for taxable years beginning before January 1, 2013) Planned

Expansion. – A taxpayer that signs a letter of commitment with the Department of Commerce,

after the Department has calculated the development tier designations for the next year but

before the beginning of that year, to undertake specific activities at a specific site within the next

two years may calculate the credit for which it qualifies based on the establishment's

development tier designation and urban progress zone or agrarian growth zone designation in the

year in which the letter of commitment was signed by the taxpayer. If the taxpayer does not

engage in the activities within the two-year period, the taxpayer does not qualify for the credit;

however, if the taxpayer later engages in the activities, the taxpayer qualifies for the credit based

on the development tier and urban progress zone or agrarian growth zone designations in effect

at that time.

(l) (Effective for taxable years beginning on or after January 1, 2013) Planned

Expansion. – A taxpayer that signs a letter of commitment with the Department of Commerce,

after the Department has calculated the development tier designations for the next year but

before the beginning of that year, to undertake specific activities at a specific site within the next

two years may calculate the credit for which it qualifies based on the establishment's

development tier designation and urban progress zone, port enhancement zone, or agrarian

growth zone designation in the year in which the letter of commitment was signed by the

taxpayer. If the taxpayer does not engage in the activities within the two-year period, the

taxpayer does not qualify for the credit; however, if the taxpayer later engages in the activities,

the taxpayer qualifies for the credit based on the development tier and urban progress zone, port

enhancement zone, or agrarian growth zone designations in effect at that time.


(m) Qualified Capital Intensive Corporations. – A corporation that is a qualified capital

intensive corporation under G.S. 105-130.4(s1) is not eligible for any credit under this Article

with respect to the facility that satisfies the condition of subdivision (2) of that subsection.

(2006-252, s. 1.1; 2007-491, s. 44(1)a; 2009-54, s. 3; 2010-147, s. 1.4; 2011-302, s. 7; 2015-241,

s. 14.30(v).)

§ 105-129.84. (See notes) Tax election; cap; carryforwards; limitations.

(a) Tax Election. – The credits provided in this Article are allowed against the franchise

tax levied in Article 3 of this Chapter, the income taxes levied in Article 4 of this Chapter, and

the gross premiums tax levied in Article 8B of this Chapter. The taxpayer may divide a credit

between the taxes against which it is allowed. Carryforwards of a credit may be divided between

the taxes against which it is allowed without regard to the original election regarding the division

of the credit.

(b) Cap. – The credits allowed under this Article may not exceed fifty percent (50%) of

the cumulative amount of taxes against which they may be claimed for the taxable year, reduced

by the sum of all other credits allowed against those taxes, except tax payments made by or on

behalf of the taxpayer. This limitation applies to the cumulative amount of credit, including

carryforwards, claimed by the taxpayer under this Article for the taxable year.

(c) Carryforward. – Unless a longer carryforward period applies, any unused portion of a

credit allowed under G.S. 105-129.87 or G.S. 105-129.88 may be carried forward for the

succeeding five years, and any unused portion of a credit allowed under G.S. 105-129.89 may be

carried forward for the succeeding 15 years. If the Secretary of Commerce makes a written

determination that the taxpayer is expected to purchase or lease, and place in service in

connection with an eligible business within a two-year period, at least one hundred fifty million

dollars ($150,000,000) worth of business and real property, any unused portion of a credit under

this Article with respect to the establishment that satisfies that condition may be carried forward

for the succeeding 20 years. If the taxpayer does not make the required level of investment, the

taxpayer shall apply the standard carryforward period rather than the 20-year carryforward

period.

(d) Statute of Limitations. – Notwithstanding Article 9 of this Chapter, a taxpayer shall

claim a credit under this Article within six months after the date set by statute for the filing of the

return, including any extensions of that date.

(e) Credit Treated as Tax Payment. – The owner of a pass-through entity that claims a

credit under this Article may treat some or all of the credit claimed as a tax payment made by or

on behalf of the taxpayer. A credit claimed that is treated as a tax payment is subject to all

provisions of this section. A credit claimed that is treated as a tax payment does not accrue

interest under G.S. 105-241.21 if the payment is determined to be an overpayment. A taxpayer

that elects to have a credit claimed under this Article treated as a tax payment must make this

election when the return is filed. (2006-252, s. 1.1; 2011-297, s. 4; 2013-414, s. 4.)

§ 105-129.85. (See notes) Fees and reports.

(a) Fee. – When filing a return for a taxable year in which the taxpayer engaged in

activity for which the taxpayer is eligible for a credit under this Article, the taxpayer shall pay

the Department of Revenue a fee of five hundred dollars ($500.00) for each type of credit the

taxpayer claims or intends to claim with respect to an establishment. The fee is due at the time

the return is due for the taxable year in which the taxpayer engaged in the activity for which the


taxpayer is eligible for a credit. No credit is allowed under this Article for a taxable year until all

outstanding fees have been paid. Fees collected under this section shall be credited to the General

Fund.

(b) Report. – The Department must include in the economic incentives report required by

G.S. 105-256 the following information itemized by credit and by taxpayer:

(1) The number and amount of credits generated and taken for each credit allowed

in this Article.

(2) The number and development tier area of new jobs with respect to which

credits were generated and to which credits were taken.

(3) The cost and development tier area of business property with respect to which

credits were generated and to which credits were taken.

(4) The cost and development tier area of real property investment with respect to

which credits were generated and to which credits were taken. (2006-252, s.

1.1; 2010-166, s. 1.9.)

§ 105-129.86. (See notes) Substantiation.

(a) Records. – To claim a credit allowed by this Article, the taxpayer shall provide any

information required by the Secretary of Revenue. Every taxpayer claiming a credit under this

Article shall maintain and make available for inspection by the Secretary of Revenue any records

the Secretary considers necessary to determine and verify the amount of the credit to which the

taxpayer is entitled. The burden of proving eligibility for the credit and the amount of the credit

shall rest upon the taxpayer, and no credit shall be allowed to a taxpayer that fails to maintain


(b) Documentation. – Each taxpayer shall provide with the tax return qualifying

information for each credit claimed under this Article. The qualifying information shall be in the

form prescribed by the Secretary and shall be signed and affirmed by the individual who signs

the taxpayer's tax return. The information required by this subsection is information

demonstrating that the taxpayer has met the conditions for qualifying for a credit and any

carryforwards and includes the following:

(1) The physical location of the jobs and investment with respect to which the

credit is claimed, including the street address and the development tier

designation of the establishment.

(2) The type of business with respect to which the credit is claimed and the

average weekly wage at the establishment with respect to which the credit is

claimed.

(3) Any other qualifying information related to a specific credit allowed under

this Article. (2006-252, s. 1.1.)

§ 105-129.87. (Effective for taxable years beginning before January 1, 2013 ─ See notes)

Credit for creating jobs.

(a) Credit. – A taxpayer that meets the eligibility requirements set out in G.S. 105-129.83

and satisfies the threshold requirement for new job creation in this State under subsection (b) of

this section during the taxable year is allowed a credit for creating jobs. The amount of the credit

for each new job created is set out in the table below and is based on the development tier

designation of the county in which the job is located. If the job is located in an urban progress

zone or an agrarian growth zone, the amount of the credit is increased by one thousand dollars


($1,000) per job. In addition, if a job located in an urban progress zone or an agrarian growth

zone is filled by a resident of that zone or by a long-term unemployed worker, the amount of the

credit is increased by an additional two thousand dollars ($2,000) per job.

Area Development Tier Amount of Credit Tier One $12,500

Tier Two 5,000

Tier Three 750

(b) Threshold. – The applicable threshold is the appropriate amount set out in the

following table based on the development tier designation of the county where the new jobs are

created during the taxable year. If the taxpayer creates new jobs at more than one eligible

establishment in a county during the taxable year, the threshold applies to the aggregate number

of new jobs created at all eligible establishments within the county during that year. If the

taxpayer creates new jobs at eligible establishments in different counties during the taxable year,

the threshold applies separately to the aggregate number of new jobs created at eligible

establishments in each county. If the taxpayer creates new jobs in an urban progress zone or an

agrarian growth zone, the applicable threshold is the one for a development tier one area. New

jobs created in an urban progress zone or an agrarian growth zone are not aggregated with jobs

created at any other eligible establishments regardless of county.

Area Development Tier Threshold Tier One 5

Tier Two 10

Tier Three 15

(c) Calculation. – A job is located in a county, an urban progress zone, or an agrarian

growth zone if more than fifty percent (50%) of the employee's duties are performed in the

county or the zone. The number of new jobs a taxpayer creates during the taxable year is

determined by subtracting the average number of full-time employees the taxpayer had in this

State during the 12-month period preceding the beginning of the taxable year from the average

number of full-time employees the taxpayer has in this State during the taxable year.

(d) Installments. – The credit may not be taken in the taxable year in which the new jobs

are created. Instead, the credit shall be taken in equal installments over the four years following

the taxable year in which the new jobs were created and is conditional upon the continued

maintenance of those jobs by the taxpayer. If, in one of the four years in which the installment of

a credit accrues, a job is no longer filled, the credit with respect to that job expires, and the

taxpayer may not take any remaining installment of the credit with respect to that job. If, in one

of the years in which the installment of a credit accrues, the number of the taxpayer's full-time

employees falls below the sum of the applicable threshold and the number of full-time

employees the taxpayer had in the year before the year in which the taxpayer qualified for the

credit, the credits with respect to all of the new jobs expire, and the taxpayer may not take any

remaining installments of the credits. When a credit expires under this subsection, the taxpayer



(e) Transferred Jobs. – Jobs transferred from one area in the State to another area in the

State are not considered new jobs for purposes of this section. Jobs that were located in this State

and that are transferred to the taxpayer from a related member of the taxpayer are not considered

new jobs for purposes of this section. If, in one of the four years in which the installment of a

credit accrues, the job with respect to which the credit was claimed is moved to an area in a


higher-numbered development tier or out of an urban progress zone or an agrarian growth zone,

the remaining installments of the credit are allowed only to the extent they would have been

allowed if the job was initially created in the area to which it was moved. If, in one of the years

in which the installment of a credit accrues, the job with respect to which the credit was claimed

is moved to an area in a lower-numbered development tier or an urban progress zone or an

agrarian growth zone, the remaining installments of the credit shall be calculated as if the job had

been created initially in the area to which it was moved.

(f) Wage Standard. – For the purposes of this section, a taxpayer satisfies the wage

standard requirement of G.S. 105-129.83 only if the taxpayer satisfies the requirement with

respect to both the new jobs, considered collectively, for which a credit is claimed and all of the

jobs at the establishment, considered collectively, with respect to which a credit is claimed.

(g) No Double Credit. – A taxpayer may not claim a credit under this section with respect

to jobs for which a taxpayer claims a credit under G.S. 105-129.8. (2006-252, s. 1.1; 2007-527, s.

6.)

§ 105-129.87. (Effective for taxable years beginning on or after January 1, 2013 – See notes

for repeal) Credit for creating jobs.

(a) Credit. – A taxpayer that meets the eligibility requirements set out in G.S. 105-129.83

and satisfies the threshold requirement for new job creation in this State under subsection (b) of

this section during the taxable year is allowed a credit for creating jobs. The amount of the credit

for each new job created is set out in the table below and is based on the development tier

designation of the county in which the job is located. If the job is located in an urban progress

zone, a port enhancement zone, or an agrarian growth zone, the amount of the credit is increased

by one thousand dollars ($1,000) per job. In addition, if a job located in an urban progress zone,

a port enhancement zone, or an agrarian growth zone is filled by a resident of that zone or by a

long-term unemployed worker, the amount of the credit is increased by an additional two

thousand dollars ($2,000) per job.

Area Development Tier Amount of Credit Tier One $12,500

Tier Two 5,000

Tier Three 750

(b) Threshold. – The applicable threshold is the appropriate amount set out in the

following table based on the development tier designation of the county where the new jobs are

created during the taxable year. If the taxpayer creates new jobs at more than one eligible

establishment in a county during the taxable year, the threshold applies to the aggregate number

of new jobs created at all eligible establishments within the county during that year. If the

taxpayer creates new jobs at eligible establishments in different counties during the taxable year,

the threshold applies separately to the aggregate number of new jobs created at eligible

establishments in each county. If the taxpayer creates new jobs in an urban progress zone, a port

enhancement zone, or an agrarian growth zone, the applicable threshold is the one for a

development tier one area. New jobs created in an urban progress zone, a port enhancement

zone, or an agrarian growth zone are not aggregated with jobs created at any other eligible

establishments regardless of county.

Area Development Tier Threshold

Tier One 5

Tier Two 10


Tier Three 15

(c) Calculation. – A job is located in a county, an urban progress zone, a port

enhancement zone, or an agrarian growth zone if more than fifty percent (50%) of the employee's

duties are performed in the county or the zone. The number of new jobs a taxpayer creates during

the taxable year is determined by subtracting the average number of full-time employees the

taxpayer had in this State during the 12-month period preceding the beginning of the taxable year

from the average number of full-time employees the taxpayer has in this State during the taxable

year.

(d) Installments. – The credit may not be taken in the taxable year in which the new jobs

are created. Instead, the credit shall be taken in equal installments over the four years following

the taxable year in which the new jobs were created and is conditional upon the continued

maintenance of those jobs by the taxpayer. If, in one of the four years in which the installment of

a credit accrues, a job is no longer filled, the credit with respect to that job expires, and the

taxpayer may not take any remaining installment of the credit with respect to that job. If, in one

of the years in which the installment of a credit accrues, the number of the taxpayer's full-time

employees falls below the sum of the applicable threshold and the number of full-time

employees the taxpayer had in the year before the year in which the taxpayer qualified for the

credit, the credits with respect to all of the new jobs expire, and the taxpayer may not take any

remaining installments of the credits. When a credit expires under this subsection, the taxpayer



(e) Transferred Jobs. – Jobs transferred from one area in the State to another area in the

State are not considered new jobs for purposes of this section. Jobs that were located in this State

and that are transferred to the taxpayer from a related member of the taxpayer are not considered

new jobs for purposes of this section. If, in one of the four years in which the installment of a

credit accrues, the job with respect to which the credit was claimed is moved to an area in a

higher-numbered development tier or out of an urban progress zone, a port enhancement zone, or

an agrarian growth zone, the remaining installments of the credit are allowed only to the extent

they would have been allowed if the job was initially created in the area to which it was moved.

If, in one of the years in which the installment of a credit accrues, the job with respect to which

the credit was claimed is moved to an area in a lower-numbered development tier or an urban

progress zone, a port enhancement zone, or an agrarian growth zone, the remaining installments

of the credit shall be calculated as if the job had been created initially in the area to which it was

moved.



respect to both the new jobs, considered collectively, for which a credit is claimed and all of the

jobs at the establishment, considered collectively, with respect to which a credit is claimed.


to jobs for which a taxpayer claims a credit under G.S. 105-129.8. (2006-252, s. 1.1; 2007-527,

s. 6; 2011-302, s. 8.)

§ 105-129.88. (Effective for taxable years beginning before January 1, 2013 ─ See notes)

Credit for investing in business property.

(a) General Credit. – A taxpayer that meets the eligibility requirements set out in G.S.

105-129.83 and that has purchased or leased business property and placed it in service in this


State during the taxable year and that has satisfied the threshold requirements of subsection (c) of

this section is allowed a credit equal to the applicable percentage of the excess of the eligible

investment amount over the applicable threshold. If the taxpayer places business property in

service in an urban progress zone or an agrarian growth zone, the applicable percentage is the

one for a development tier one area. Business property is eligible if it is not leased to another

party. The credit may not be taken for the taxable year in which the business property is placed

in service but shall be taken in equal installments over the four years following the taxable year

in which it is placed in service. The applicable percentage is as follows:

Area Development Tier Applicable Percentage Tier One 7%

Tier Two 5%

Tier Three 3.5%

(b) Eligible Investment Amount. – The eligible investment amount is the lesser of (i) the

cost of the eligible business property and (ii) the amount by which the cost of all of the

taxpayer's eligible business property that is in service in this State on the last day of the taxable

year exceeds the cost of all of the taxpayer's eligible business property that was in service in this

State on the last day of the base year. The base year is that year, of the three immediately

preceding taxable years, in which the taxpayer had the most eligible business property in service

in this State.

(c) Threshold. – The applicable threshold is the appropriate amount set out in the

following table based on the development tier where the eligible business property is placed in

service during the taxable year. If the taxpayer places business property in service in an urban

progress zone or an agrarian growth zone, the applicable threshold is the one for a development

tier one area. Business property placed in service in an urban progress zone or an agrarian

growth zone is not aggregated with business property placed in service at any other eligible

establishments regardless of county. If the taxpayer places eligible business property in service at

more than one establishment in a county during the taxable year, the threshold applies to the

aggregate amount of eligible business property placed in service during the taxable year at all

establishments in the county. If the taxpayer places eligible business property in service at

establishments in different counties, the threshold applies separately to the aggregate amount of

eligible business property placed in service in each county. If the taxpayer places eligible

business property in service at an establishment over the course of a two-year period, the

applicable threshold for the second taxable year is reduced by the eligible investment amount for

the previous taxable year.

Area Development Tier Threshold Tier One $ -0-

Tier Two 1,000,000

Tier Three 2,000,000

(d) Expiration. – As used in this subsection, the term "disposed of" means disposed of,

taken out of service, or moved out of State. If, in one of the four years in which the installment of

a credit accrues, the business property with respect to which the credit was claimed is disposed

of, the credit expires, and the taxpayer may not take any remaining installment of the credit for

that business property unless the cost of that business property is offset in the same taxable year

by the taxpayer's new investment in eligible business property placed in service in the same

county, as provided in this subsection. If, during the taxable year, the taxpayer disposed of the

business property for which installments remain, there has been a net reduction in the cost of all


the taxpayer's eligible business property that are in service in the same county as the business

property that was disposed of, and the amount of this reduction is greater than twenty percent

(20%) of the cost of the business property that was disposed of, then the credit for the business

property that was disposed of expires. If the amount of the net reduction is equal to twenty

percent (20%) or less of the cost of the business property that was disposed of, or if there is no

net reduction, then the credit does not expire. In determining the amount of any net reduction

during the taxable year, the cost of business property the taxpayer placed in service during the

taxable year and for which the taxpayer claims a credit under Article 3A or Article 3B of this

Chapter may not be included in the cost of all the taxpayer's eligible business property that is in

service. If in a single taxable year business property with respect to two or more credits in the

same county are disposed of, the net reduction in the cost of all the taxpayer's eligible business

property that is in service in the same county is compared to the total cost of all the business

property for which credits expired in order to determine whether the remaining installments of

the credits are forfeited.

The expiration of a credit does not prevent the taxpayer from taking the portion of an


G.S. 105-129.84.

(e) Transferred Property. – If, in one of the four years in which the installment of a credit

accrues, the business property with respect to which the credit was claimed is moved to a county

in a higher-numbered development tier or out of an urban progress zone or an agrarian growth

zone, the remaining installments of the credit are allowed only to the extent they would have

been allowed if the business property had been placed in service initially in the area to which it

was moved. If, in one of the four years in which the installment of a credit accrues, the business

property with respect to which a credit was claimed is moved to a county in a lower-numbered

development tier or an urban progress zone or an agrarian growth zone, the remaining

installments of the credit shall be calculated as if the business property had been placed in

service initially in the area to which it was moved.



respect to all of the jobs at the establishment, considered collectively, with respect to which a

credit is claimed.


to business property for which the taxpayer claims a credit under G.S. 105-129.9 or G.S.

105-129.9A. (2006-252, s. 1.1; 2007-527, ss. 7, 8.)

§ 105-129.88. (Effective for taxable years beginning on or after January 1, 2013 – See notes

for repeal) Credit for investing in business property.

(a) General Credit. – A taxpayer that meets the eligibility requirements set out in G.S.

105-129.83 and that has purchased or leased business property and placed it in service in this

State during the taxable year and that has satisfied the threshold requirements of subsection (c) of

this section is allowed a credit equal to the applicable percentage of the excess of the eligible

investment amount over the applicable threshold. If the taxpayer places business property in

service in an urban progress zone, a port enhancement zone, or an agrarian growth zone, the

applicable percentage is the one for a development tier one area. Business property is eligible if

it is not leased to another party. The credit may not be taken for the taxable year in which the

business property is placed in service but shall be taken in equal installments over the four years


following the taxable year in which it is placed in service. The applicable percentage is as

follows:

Area Development Tier Applicable Percentage Tier One 7%

Tier Two 5%

Tier Three 3.5%

(b) Eligible Investment Amount. – The eligible investment amount is the lesser of (i) the

cost of the eligible business property and (ii) the amount by which the cost of all of the

taxpayer's eligible business property that is in service in this State on the last day of the taxable

year exceeds the cost of all of the taxpayer's eligible business property that was in service in this

State on the last day of the base year. The base year is that year, of the three immediately

preceding taxable years, in which the taxpayer had the most eligible business property in service

in this State.

(c) Threshold. – The applicable threshold is the appropriate amount set out in the

following table based on the development tier where the eligible business property is placed in

service during the taxable year. If the taxpayer places business property in service in an urban

progress zone, a port enhancement zone, or an agrarian growth zone, the applicable threshold is

the one for a development tier one area. Business property placed in service in an urban progress

zone, a port enhancement zone, or an agrarian growth zone is not aggregated with business

property placed in service at any other eligible establishments regardless of county. If the

taxpayer places eligible business property in service at more than one establishment in a county

during the taxable year, the threshold applies to the aggregate amount of eligible business

property placed in service during the taxable year at all establishments in the county. If the

taxpayer places eligible business property in service at establishments in different counties, the

threshold applies separately to the aggregate amount of eligible business property placed in

service in each county. If the taxpayer places eligible business property in service at an

establishment over the course of a two-year period, the applicable threshold for the second

taxable year is reduced by the eligible investment amount for the previous taxable year.

Area Development Tier Threshold Tier One $ -0-

Tier Two 1,000,000

Tier Three 2,000,000

(d) Expiration. – As used in this subsection, the term "disposed of" means disposed of,

taken out of service, or moved out of State. If, in one of the four years in which the installment of

a credit accrues, the business property with respect to which the credit was claimed is disposed

of, the credit expires, and the taxpayer may not take any remaining installment of the credit for

that business property unless the cost of that business property is offset in the same taxable year

by the taxpayer's new investment in eligible business property placed in service in the same

county, as provided in this subsection. If, during the taxable year, the taxpayer disposed of the

business property for which installments remain, there has been a net reduction in the cost of all

the taxpayer's eligible business property that are in service in the same county as the business

property that was disposed of, and the amount of this reduction is greater than twenty percent

(20%) of the cost of the business property that was disposed of, then the credit for the business

property that was disposed of expires. If the amount of the net reduction is equal to twenty

percent (20%) or less of the cost of the business property that was disposed of, or if there is no

net reduction, then the credit does not expire. In determining the amount of any net reduction


during the taxable year, the cost of business property the taxpayer placed in service during the

taxable year and for which the taxpayer claims a credit under Article 3A or Article 3B of this

Chapter may not be included in the cost of all the taxpayer's eligible business property that is in

service. If in a single taxable year business property with respect to two or more credits in the

same county are disposed of, the net reduction in the cost of all the taxpayer's eligible business

property that is in service in the same county is compared to the total cost of all the business

property for which credits expired in order to determine whether the remaining installments of

the credits are forfeited.

The expiration of a credit does not prevent the taxpayer from taking the portion of an


G.S. 105-129.84.

(e) Transferred Property. – If, in one of the four years in which the installment of a credit

accrues, the business property with respect to which the credit was claimed is moved to a county

in a higher-numbered development tier or out of an urban progress zone, a port enhancement

zone, or an agrarian growth zone, the remaining installments of the credit are allowed only to the

extent they would have been allowed if the business property had been placed in service initially

in the area to which it was moved. If, in one of the four years in which the installment of a credit

accrues, the business property with respect to which a credit was claimed is moved to a county in

a lower-numbered development tier or an urban progress zone, a port enhancement zone, or an

agrarian growth zone, the remaining installments of the credit shall be calculated as if the

business property had been placed in service initially in the area to which it was moved.



respect to all of the jobs at the establishment, considered collectively, with respect to which a

credit is claimed.


to business property for which the taxpayer claims a credit under G.S. 105-129.9 or G.S.

105-129.9A. (2006-252, s. 1.1; 2007-527, ss. 7, 8; 2011-302, s. 9.)

§ 105-129.89. (See notes) Credit for investment in real property.

(a) Credit. – If a taxpayer that has purchased or leased real property in a development tier

one area begins to use the property in an eligible business during the taxable year, the taxpayer is

allowed a credit equal to thirty percent (30%) of the eligible investment amount if all of the

eligibility requirements of G.S. 105-129.83 and of subsection (b) of this section are met. For the

purposes of this section, property is located in a development tier one area if the area the

property is located in was a development tier one area at the time the taxpayer made a written

application for the determination required under subsection (b) of this section. The eligible

investment amount is the lesser of (i) the cost of the property and (ii) the amount by which the

cost of all of the real property the taxpayer is using in this State in an eligible business on the last

day of the taxable year exceeds the cost of all of the real property the taxpayer was using in this

State in an eligible business on the last day of the base year. The base year is that year, of the

three immediately preceding taxable years, in which the taxpayer was using the most real

property in this State in an eligible business. In the case of property that is leased, the cost of the

property is not determined as provided in G.S. 105-129.81 but is considered to be the taxpayer's

lease payments over a seven-year period, plus any expenditures made by the taxpayer to improve

the property before it is used by the taxpayer if the expenditures are not reimbursed or credited


by the lessor. The entire credit may not be taken for the taxable year in which the property is first

used in an eligible business but shall be taken in equal installments over the seven years

following the taxable year in which the property is first used in an eligible business. When part

of the property is first used in an eligible business in one year and part is first used in an eligible

business in a later year, separate credits may be claimed for the amount of property first used in

an eligible business in each year. The basis in any real property for which a credit is allowed

under this section shall be reduced by the amount of credit allowable.

(b) Determination by the Secretary of Commerce. – A taxpayer is eligible for the credit

allowed under this section with respect to an establishment only if the Secretary of Commerce

makes a written determination that the taxpayer is expected to purchase or lease and use in an

eligible business at that establishment within a three-year period at least ten million dollars

($10,000,000) of real property and that the establishment that is the subject of the credit will

create at least 200 new jobs within two years of the time that the property is first used in an

eligible business. If the taxpayer fails to timely make the required level of investment or fails to

timely create the required number of new jobs, the taxpayer forfeits the credit as provided in G.S.

105-129.83.

(c) Mixed Use Property. – If the taxpayer uses only part of the property in an eligible

business, the amount of the credit allowed under this section is reduced by multiplying it by a

fraction, the numerator of which is the square footage of the property used in an eligible business

and the denominator of which is the total square footage of the property.

(d) Expiration. – If, in one of the seven years in which the installment of a credit accrues,

the property with respect to which the credit was claimed is no longer used in an eligible

business, the credit expires, and the taxpayer may not take any remaining installment of the

credit. If, in one of the seven years in which the installment of a credit accrues, part of the

property with respect to which the credit was claimed is no longer used in an eligible business,

the remaining installments of the credit shall be reduced by multiplying it by the fraction

described in subsection (c) of this section. If, in one of the years in which the installment of a

credit accrues and by which the taxpayer is required to have created 200 new jobs at the

property, the total number of employees the taxpayer employs at the property with respect to

which the credit is claimed is less than 200, the credit expires, and the taxpayer may not take any

remaining installment of the credit.

In each of these cases, the taxpayer may nonetheless take the portion of an installment that

accrued in a previous year and was carried forward to the extent permitted under G.S.

105-129.84.

(e) No Double Credit. – A taxpayer may not claim a credit under this section with respect

to real property for which a credit is claimed under G.S. 105-129.12 or G.S. 105-129.12A.

(2006-252, s. 1.1.)







Article 3K.

Tax Incentives for Railroad Intermodal Facilities.

(Repealed for taxable years beginning on or after January 1, 2038. See G.S. 105-129.99.)

§ 105-129.95. (Repealed for taxable years beginning on or after January 1, 2038 – see note)

Definitions.


(1) Costs of construction. – The costs of acquiring and improving land,

constructing buildings and other structures, equipping the facility, and

constructing and equipping rail tracks to the railroad intermodal facility that

are necessary to access and support facility operations. In the case of property

owned or leased by the taxpayer, cost is determined pursuant to regulations

adopted under section 1012 of the Code.

(2) Eligible railroad intermodal facility. – A railroad intermodal facility whose

costs of construction exceed thirty million dollars ($30,000,000).

(3) Intermodal facility. – A facility where freight is transferred from one mode of

transportation to another.

(4) Railroad intermodal facility. – An intermodal facility whose primary purpose

is to transfer freight between a railroad and another mode of transportation.

(2007-323, s. 31.23(a); 2007-345, s. 14.7(a).)


Credit for constructing a railroad intermodal facility.

(a) Credit. – A taxpayer that constructs or leases an eligible railroad intermodal facility in

this State and places it in service during the taxable year is allowed a tax credit equal to fifty

percent (50%) of all amounts payable by the taxpayer towards the costs of construction or under

the lease.

(b) Taxes Credited. – The credit provided in this section is allowed against the franchise

tax levied in Article 3 of this Chapter or the income taxes levied in Article 4 of this Chapter. The

taxpayer must elect the tax against which a credit will be claimed when filing the return on

which the first installment of the credit is claimed. This election is binding. The credit may not

exceed fifty percent (50%) of the tax against which it is applied. Any unused portion of a credit

may be carried forward for the succeeding 10 years. Any carryforwards of a credit must be

claimed against the same tax. (2007-323, s. 31.23(a).)


Substantiation.


by the Secretary. Each taxpayer claiming a credit under this Article must maintain and make

available for inspection by the Secretary any records the Secretary considers necessary to

determine and verify the amount of the credit to which the taxpayer is entitled. The burden of

proving eligibility for a credit and the amount of the credit rests upon the taxpayer, and no credit


may be allowed to a taxpayer that fails to maintain adequate records or to make them available

for inspection. (2007-323, s. 31.23(a).)


Report.



(1) The number of taxpayers that claimed a credit allowed in this Article.

(2) The amount of each credit claimed and the taxes against which it was applied.

(3) The total cost to the General Fund of the credits claimed. (2007-323, s.

31.23(a); 2010-166, s. 1.10.)

§ 105-129.99. Sunset.

This Article is repealed effective for taxable years beginning on or after January 1, 2038.

(2007-323, s. 31.23(a).)






Article 3L.

Historic Rehabilitation Tax Credits Investment Program.

§ 105-129.105. (See note for repeal) Credit for rehabilitating income-producing historic

structure.

(a) Credit. – A taxpayer who is allowed a federal income tax credit under section 47 of

the Code for making qualified rehabilitation expenditures for a certified historic structure located

in this State is allowed a credit equal to the sum of the following:

(1) Base amount. – The percentage of qualified rehabilitation expenditures at the

levels provided in the table below:

Expenses

Over Up To Rate 0 $10 million 15.00%

$10 million $20 million 10.00%

(2) Development tier bonus. – An amount equal to five percent (5%) of qualified

rehabilitation expenditures not exceeding twenty million dollars

($20,000,000) if the certified historic structure is located in a development tier

one or two area.

(3) Targeted investment bonus. – An amount equal to five percent (5%) of

qualified rehabilitation expenditures not exceeding twenty million dollars


($20,000,000) if the certified historic structure is located on an eligible

targeted investment site.

(b) Pass-Through Entity. – Notwithstanding the provisions of G.S. 105-131.8 and G.S.

105-269.15, a pass-through entity that qualifies for the credit provided in this section may

allocate the credit among any of its owners in its discretion as long as an owner's adjusted basis

in the pass-through entity, as determined under the Code, at the end of the taxable year in which

the certified historic structure is placed in service, is at least forty percent (40%) of the amount of

credit allocated to that owner. Owners to whom a credit is allocated are allowed the credit as if

they had qualified for the credit directly. A pass-through entity and its owners must include with

their tax returns for every taxable year in which an allocated credit is claimed a statement of the

allocation made by the pass-through entity and the allocation that would have been required

under G.S. 105-131.8 or G.S. 105-269.15.



(2) Development tier area. – Defined in G.S. 143B-437.08.

(3) Eligibility certification. – A certification obtained from the State Historic

Preservation Officer that the site comprises an eligible targeted investment

site.

(4) Eligible targeted investment site. – A site located in this State that satisfies all

of the following conditions:

a. It was used as a manufacturing facility or for purposes ancillary to

manufacturing, as a warehouse for selling agricultural products, or as a

public or private utility.

b. It is a certified historic structure.

c. It has been at least sixty-five percent (65%) vacant for a period of at

least two years immediately preceding the date the eligibility

certification is made.



(7) State Historic Preservation Officer. – The Deputy Secretary of the Office of

Archives and History of the North Carolina Department of Natural and

Cultural Resources, or the Deputy Secretary's designee, who acts to

administer the historic preservation programs within the State.

(8) Targeted investment. – Qualified rehabilitation expenditures on a certified

historic structure that is located on an eligible targeted investment site.

(d) Limitations. – The amount of credit allowed under this section with respect to

qualified rehabilitation expenditures for an income-producing certified historic structure may not

exceed four million five hundred thousand dollars ($4,500,000).

(e) 2014 and 2015 Expenses. – A taxpayer is eligible for a credit under this section for

taxable years beginning on or after January 1, 2016, for qualifying rehabilitation expenditures

that were incurred in 2014 and 2015 if all of the following conditions are met:

(1) The certified historic structure is located in a Tier 1 or a Tier 2 county.

(2) The certified historic structure is owned by a city.

(3) The qualifying rehabilitation activity commenced in 2014.

(4) A certificate of occupancy is issued on or before December 31, 2015.


(5) The taxpayer meets all of the other conditions in this section. (2015-241, ss.

14.30(c), 32.3(a); 2015-264, s. 54.5(a).)

§ 105-129.106. (See note for repeal) Credit for rehabilitating non-income-producing

historic structure.


of the Code and who has rehabilitation expenses of at least ten thousand dollars ($10,000) for a

State-certified historic structure located in this State is allowed a credit equal to fifteen percent

(15%) of the rehabilitation expenses.

(b) Limitations. – The amount of credit allowed under this section with respect to

rehabilitation expenses for a non-income-producing certified historic structure may not exceed

twenty-two thousand five hundred dollars ($22,500) per discrete property parcel. In the event

that the taxpayer is the transferee of a State-certified historic structure for which rehabilitation

expenses were made, the taxpayer as transferee is allowed a credit under this section only if the

transfer takes place before the structure is placed in service. In this event, no other taxpayer may

claim such credit. A taxpayer is allowed to claim a credit under this section no more than once in

any five-year period, carryovers notwithstanding.


(1) Certified rehabilitation. – Repairs or alterations consistent with the Secretary

of the Interior's Standards for Rehabilitation and certified as such by the State

Historic Preservation Officer.

(2) Discrete property parcel. – A lot or tract described by metes and bounds, a

deed or plat of which has been recorded in the deed records of the county in

which the property is located, and on which a State-certified historic structure

is located, or a single condominium unit in a State-certified historic structure.

(3) Placed in service. – The later of the date on which the rehabilitation is

completed or the date on which the property is used for its intended purpose.

(4) Rehabilitation expenses. – Expenses incurred in the certified rehabilitation of

a certified historic structure and added to the property's basis. The expenses

must be incurred within any 24-month period per discrete property parcel. The

term does not include the cost of acquiring the property, the cost attributable

to the enlargement of an existing building, the cost of site work expenditures,

or the cost of personal property.

(5) State-certified historic structure. – A structure that is individually listed in the

National Register of Historic Places or is certified by the State Historic

Preservation Officer as contributing to the historic significance of a National

Register Historic District or a locally designated historic district certified by

the United States Department of the Interior.

(6) State Historic Preservation Officer. – Defined in G.S. 105-129.105(c)(7).

(2015-241, s. 32.3(a); 2015-264, s. 54.5(b).)

§ 105-129.107. (See note for repeal) Rules; fees.

(a) Rules. – The North Carolina Historical Commission, in consultation with the State

Historic Preservation Officer, may adopt rules needed to administer any certification process

required by this Article.


(b) Fees. – The North Carolina Historical Commission, in consultation with the State

Historic Preservation Officer, may adopt a schedule of fees for providing any certifications

required by this Article, or Article 3D or 3H as they provided as of December 31, 2014. In

establishing the fee schedule, the Commission shall consider the administrative and personnel

costs incurred by the Department of Natural and Cultural Resources. An application fee may not

exceed one percent (1%) of the completed qualifying rehabilitation expenditures. The proceeds

of the fees are receipts of the Department of Natural and Cultural Resources and must be used

for performing its duties under this Article. (2015-241, ss. 14.30(c), 32.3(a); 2015-264, s.

54.5(b).)

§ 105-129.108. (See note for repeal) Tax credited; credit limitations.

(a) Tax Credited. – The credits provided in this Article are allowed against the franchise

tax imposed in Article 3 of this Chapter, the income taxes levied in Article 4 of this Chapter, or

the gross premiums tax imposed in Article 8B of this Chapter. The taxpayer may take a credit

allowed by this Article against only one of the taxes against which it is allowed. The taxpayer

must elect the tax against which a credit will be claimed when filing the return on which it is

claimed, and this election is binding. Any carryforwards of a credit must be claimed against the

same tax.

(b) Return. – A taxpayer may claim a credit allowed by this Article on a return filed for

the taxable year in which the certified historic structure was placed into service. When an

income-producing certified historic structure as defined in G.S. 105-129.105 is placed into

service in two or more phases in different years, the amount of credit that may be claimed in a

year is the amount based on the qualified rehabilitation expenditures associated with the phase

placed into service during that year.

(c) Cap. – A credit allowed under this Article may not exceed the amount of the tax

against which it is claimed for the taxable year reduced by the sum of all credits allowed, except

payments of tax made by or on behalf of the taxpayer. Any unused portion of the credit may be

carried forward for the succeeding nine years.

(d) Forfeiture for Disposition. – A taxpayer who is required under section 50 of the Code

to recapture all or part of the federal credit for rehabilitating an income-producing historic

structure located in this State forfeits the corresponding part of the State credit allowed under

G.S. 105-129.105 with respect to that historic structure. If the credit was allocated among the

owners of a pass-through entity, the forfeiture applies to the owners in the same proportion that

the credit was allocated.

(e) Forfeiture for Change in Ownership. – If an owner of a pass-through entity that has

qualified for the credit allowed under G.S. 105-129.105 disposes of all or a portion of the

owner's interest in the pass-through entity within five years from the date the rehabilitated

historic structure is placed in service and the owner's interest in the pass-through entity is

reduced to less than two-thirds of the owner's interest in the pass-through entity at the time the

historic structure was placed in service, the owner forfeits a portion of the credit. The amount

forfeited is determined by multiplying the amount of credit by the percentage reduction in

ownership and then multiplying that product by the forfeiture percentage. The forfeiture

percentage equals the recapture percentage found in the table in section 50(a)(1)(B) of the Code.

(f) Exceptions to Forfeiture. – Forfeiture as provided in subsection (e) of this section is








(g) Liability From Forfeiture. – A taxpayer or an owner of a pass-through entity that






(h) Substantiation. – To claim a credit allowed by this Article, the taxpayer must provide

any information required by the Secretary of Revenue, including a copy of the certification

obtained from the State Historic Preservation Office verifying that the historic structure has been

rehabilitated in accordance with the requirements set out in this Article, and a copy of the

eligibility certification if the historic structure is located in an eligible targeted investment site

and the targeted investment bonus is claimed. Every taxpayer claiming a credit under this Article

must maintain and make available for inspection by the Secretary of Revenue any records the

Secretary considers necessary to determine and verify the amount of the credit to which the

taxpayer is entitled. The burden of proving eligibility for the credit and the amount of the credit

rests upon the taxpayer, and no credit may be allowed to a taxpayer that fails to maintain


(i) No Double Credit. – A taxpayer that claims a credit under this Article may not also

claim a credit under Article 3D or Article 3H of this Chapter with respect to the same activity.

(2015-241, s. 32.3(a); 2015-264, s. 54.5(b); 2015-268, s. 10.1(b).)

§ 105-129.109. (See note for repeal) Report; tracking.

(a) The Department must include in the economic incentives report required by G.S.

105-256 the following information itemized by taxpayer:




(3) The total cost to the General Fund of the credits taken.

(b) The Department shall include in the economic incentives report required by G.S.

105-256 the following information:

(1) The total amount of tax credits claimed and the total amount of tax credits

taken against current taxes, by type of tax, during the relevant tax year.

(2) The total amount of tax credits carried forward, by type of tax. (2015-241, s.

32.3(a); 2015-264, s. 54.5(b).)

§ 105-129.110. Sunset.

This Article expires for qualified rehabilitation expenditures and rehabilitation expenses

incurred on or after January 1, 2020. (2015-241, s. 32.3(a); 2015-264, s. 54.5(b).)

Article 4.

Income Tax.


Part 1. Corporation Income Tax.

§ 105-130. Short title.

This Part of the income tax Article shall be known and may be cited as the Corporation

Income Tax Act. (1939, c. 158, s. 300; 1967, c. 1110, s. 3; 1998-98, ss. 42, 61, 68.)

§ 105-130.1. Purpose.

The general purpose of this Part is to impose a tax for the use of the State government upon

the net income of every domestic corporation and of every foreign corporation doing business in

this State.

The tax imposed upon the net income of corporations in this Part is in addition to all other

taxes imposed under this Subchapter. (1939, c. 158, s. 301; 1967, c. 1110, s. 3; 1998-98, s. 69.)


The following definitions apply in this Part:

(1) Affiliate. – A corporation is an affiliate of another corporation when both are

directly or indirectly controlled by the same parent corporation or by the same

or associated financial interests by stock ownership, interlocking directors, or

by any other means whatsoever, whether the control is direct or through one

or more subsidiary, affiliated, or controlled corporations.

(2) Code. – Defined in G.S. 105-228.90.

(3) Corporation. – A joint-stock company or association, an insurance company, a

domestic corporation, a foreign corporation, or a limited liability company.

(4) C Corporation. – A corporation that is not an S Corporation.

(5) Department. – The Department of Revenue.

(6) Domestic corporation. – A corporation organized under the laws of this State.

(7) Fiscal year. – An income year, ending on the last day of any month other than

December. A corporation that pursuant to the provisions of the Code has

elected to compute its federal income tax liability on the basis of an annual

period varying from 52 to 53 weeks shall compute its taxable income under

this Part on the basis of the same period used by the corporation in computing

its federal income tax liability for the income year.

(8) Foreign corporation. – Any corporation other than a domestic corporation.

(9) Gross income. – Defined in section 61 of the Code.

(10) Income year. – The calendar year or the fiscal year upon the basis of which

the net income is computed under this Part. If no fiscal year has been

established, the income year is the calendar year. In the case of a return made

for a fractional part of a year under the provisions of this Part or under rules

adopted by the Secretary, the income year is the period for which the return is

made.

(11) Limited liability company. – Either a domestic limited liability company

organized under Chapter 57D of the General Statutes or a foreign limited

liability company authorized by that Chapter to transact business in this State

that is classified for federal income tax purposes as a corporation. As applied

to a limited liability company that is a corporation under this Part, the term

"shareholder" means a member of the limited liability company and the term


"corporate officer" means a member or manager of the limited liability

company.

(12) Parent. – A corporation is a parent of another corporation when, directly or

indirectly, it controls the other corporation by stock ownership, interlocking

directors, or by any other means whatsoever exercised by the same or

associated financial interests, whether the control is direct or through one or

more subsidiary, affiliated, or controlled corporations.

(13) S Corporation. – Defined in G.S. 105-131(b).


(15) State net income. – The taxpayer's federal taxable income as determined under

the Code, adjusted as provided in G.S. 105-130.5 and, in the case of a

corporation that has income from business activity that is taxable both within

and without this State, allocated and apportioned to this State as provided in

G.S. 105-130.4.

(16) Subsidiary. – A corporation is a subsidiary of another corporation when,

directly or indirectly, it is subject to control by the other corporation by stock

ownership, interlocking directors, or by any other means whatsoever exercised

by the same or associated financial interest, whether the control is direct or

through one or more subsidiary, affiliated, or controlled corporations.

(17) Taxable year. – Income year.

(18) Taxpayer. – A corporation subject to the tax imposed by this Part. (1939, c.

158, s. 302; 1941, c. 50, s. 5; 1955, c. 1331, s. 2; 1957, c. 1340, s. 4; 1963, c.

1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1983, c. 713, ss. 68, 82;

1985, c. 656, s. 7; 1985 (Reg. Sess., 1986), c. 853, s. 1; 1987, c. 778, s. 1;

1987 (Reg. Sess., 1988), c. 1015, s. 3; 1989, c. 36, s. 3; 1989 (Reg. Sess.,

1990), c. 981, s. 3; 1991, c. 689, s. 257; 1991 (Reg. Sess., 1992), c. 922, s. 4;

1993, c. 12, s. 5; c. 354, s. 12; 1995, c. 17, s. 3; 1998-98, s. 69; 2006-162, s.

3(a); 2012-79, s. 1.14(b); 2013-157, s. 27.)

§ 105-130.3. (Effective for taxable years beginning before January 1, 2014) Corporations.

A tax is imposed on the State net income of every C Corporation doing business in this State.

An S Corporation is not subject to the tax levied in this section. The tax is a percentage of the

taxpayer's State net income computed as follows:

Income Years Beginning Tax

In 1997 7.5%

In 1998 7.25%

In 1999 7%

After 1999 6.9%.

(1939, c. 158, s. 311; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 752, s. 3; 1953, c. 1302, s. 4;

1955, c. 1350, s. 18; 1957, c. 1340, s. 4; 1959, c. 1259, s. 4; 1963, c. 1169, s. 2; c. 1186; 1967, c.

1110, s. 3; 1973, c. 1287, s. 4; 1975, c. 275, s. 4; 1977, c. 657, s. 4; 1979, c. 179, s. 2; 1981, c.

15; 1983, c. 713, s. 69; 1987, c. 622, s. 8; 1987 (Reg. Sess., 1988), c. 1089, s. 5; 1989, c. 728, s.

1.33; 1991, c. 689, s. 258; 1996, 2nd Ex. Sess., c. 13, s. 2.1.)

§ 105-130.3. (Effective for taxable years beginning on or after January 1, 2014, and before

January 1, 2015) Corporations.


A tax is imposed on the State net income of every C Corporation doing business in this State

at the rate of six percent (6%). An S Corporation is not subject to the tax levied in this section.

(1939, c. 158, s. 311; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 752, s. 3; 1953, c. 1302, s. 4;

1955, c. 1350, s. 18; 1957, c. 1340, s. 4; 1959, c. 1259, s. 4; 1963, c. 1169, s. 2; c. 1186; 1967, c.

1110, s. 3; 1973, c. 1287, s. 4; 1975, c. 275, s. 4; 1977, c. 657, s. 4; 1979, c. 179, s. 2; 1981, c.


1.33; 1991, c. 689, s. 258; 1996, 2nd Ex. Sess., c. 13, s. 2.1; 2013-316, s. 2.1(a).)

§ 105-130.3. (Effective for taxable years beginning on or after January 1, 2015 and before

January 1, 2016) Corporations.


at the rate of five percent (5%). An S Corporation is not subject to the tax levied in this section.

(1939, c. 158, s. 311; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 752, s. 3; 1953, c. 1302, s. 4;

1955, c. 1350, s. 18; 1957, c. 1340, s. 4; 1959, c. 1259, s. 4; 1963, c. 1169, s. 2; c. 1186; 1967, c.

1110, s. 3; 1973, c. 1287, s. 4; 1975, c. 275, s. 4; 1977, c. 657, s. 4; 1979, c. 179, s. 2; 1981, c.


1.33; 1991, c. 689, s. 258; 1996, 2nd Ex. Sess., c. 13, s. 2.1; 2013-316, ss. 2.1(a), 2.2(a).)

§ 105-130.3. (Effective for taxable years beginning on or after January 1, 2016)

Corporations.


at the rate of four percent (4%). An S Corporation is not subject to the tax levied in this section.

(1939, c. 158, s. 311; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 752, s. 3; 1953, c. 1302, s. 4;

1955, c. 1350, s. 18; 1957, c. 1340, s. 4; 1959, c. 1259, s. 4; 1963, c. 1169, s. 2; c. 1186; 1967, c.

1110, s. 3; 1973, c. 1287, s. 4; 1975, c. 275, s. 4; 1977, c. 657, s. 4; 1979, c. 179, s. 2; 1981, c.


1.33; 1991, c. 689, s. 258; 1996, 2nd Ex. Sess., c. 13, s. 2.1; 2013-316, ss. 2.1(a), 2.2(a);

2015-241, s. 32.13(a).)

§ 105-130.3A: Expired.

§ 105-130.3B: Expired pursuant to its own terms, effective for taxable years beginning on or


§ 105-130.3C. Rate reduction trigger.

(a) (Effective for taxable years beginning before January 1, 2016) Trigger. – If the

amount of net General Fund tax collected in fiscal year 2014-2015 or fiscal year 2015-2016

exceeds the targeted amount for that fiscal year, the rate of tax set in G.S. 105-130.3 may be

decreased in accordance with this section effective for the taxable year that begins on the

following January 1. The Secretary must notify taxpayers if the rate decreases under this section.

The rate is decreased by one percent (1%) if net General Fund tax collections for fiscal year

2014-2015 exceed the targeted amount of twenty billion two hundred million dollars

($20,200,000,000). The rate is decreased by one percent (1%) if net General Fund tax collections

for fiscal year 2015-2016 exceed the targeted amount of twenty billion nine hundred seventy-five

million dollars ($20,975,000,000). Effective for taxable years beginning on or after January 1,

2017, the rate of tax set in G.S. 105-130.3 is the rate determined in accordance with this section.


(a) (Effective for taxable years beginning on or after January 1, 2016) Trigger. –

When the amount of net General Fund tax collected in a fiscal year exceeds twenty billion nine

hundred seventy-five million dollars ($20,975,000,000), the rate of tax set in G.S. 105-130.3

must be decreased to three percent (3%) effective for the taxable year that begins on the

following January 1. The Secretary must notify taxpayers if the rate decreases under this section.

(b) Tax Collections. – For purposes of this section, the amount of net General Fund tax

collected for a fiscal year is the amount of net revenue as reported by the Department of

Revenue's June Statement of Collection as "Total General Fund Revenue" for the 12-month

period that ended the previous June 30, modified as follows:

(1) Less any large one-time, nonrecurring revenue as reported to the Fiscal

Research Division of the General Assembly by the Department and verified

by the Fiscal Research Division of the General Assembly.

(2) Adjusted by any changes in net collections resulting from the suspension or

termination of transfers out of General Fund tax collections. (2013-316, s.

2.2(b); 2014-100, s. 37.1(a); 2015-241, s. 32.13(b); 2015-268, s. 10.1(f).)

§ 105-130.4. Allocation and apportionment of income for corporations.

(a) As used in this section, unless the context otherwise requires:

(1) "Apportionable income" means all income that is apportionable under the

United States Constitution.

(2) "Commercial domicile" means the principal place from which the trade or

business of the taxpayer is directed or managed.

(3) "Compensation" means wages, salaries, commissions and any other form of

remuneration paid to employees for personal services.

(4) (Repealed effective for taxable years beginning on or after January 1,

2018) "Excluded corporation" means any corporation engaged in business as a

building or construction contractor, a securities dealer, or a loan company or a

corporation that receives more than fifty percent (50%) of its ordinary gross

income from intangible property.

(5) "Nonapportionable income" means all income other than apportionable

income.


2018) "Public utility" means any corporation that is subject to control of one

or more of the following entities: the North Carolina Utilities Commission, the

Federal Communications Commission, the Interstate Commerce Commission,

the Federal Energy Regulatory Commission, or the Federal Aviation Agency;

and that owns or operates for public use any plant, equipment, property,

franchise, or license for the transmission of communications, the

transportation of goods or persons, or the production, storage, transmission,

sale, delivery or furnishing of electricity, water, steam, oil, oil products, or

gas. The term also includes a motor carrier of property whose principal

business activity is transporting property by motor vehicle for hire over the

public highways of this State.

(7) "Sales" means all gross receipts of the corporation except for the following

receipts:

a. Receipts from a casual sale of property.


b. Receipts allocated under subsections (c) through (h) of this section.

c. Receipts exempt from taxation.

d. The portion of receipts realized from the sale or maturity of securities

or other obligations that represents a return of principal.

(8) "Casual sale of property" means the sale of any property which was not

purchased, produced or acquired primarily for sale in the corporation's regular

trade or business.

(9) "State" means any state of the United States, the District of Columbia, the

Commonwealth of Puerto Rico, any territory or possession of the United

States, and any foreign country or political subdivision thereof.

(b) A corporation having income from business activity which is taxable both within and

without this State shall allocate and apportion its net income or net loss as provided in this

section. For purposes of allocation and apportionment, a corporation is taxable in another state if

(i) the corporation's business activity in that state subjects it to a net income tax or a tax

measured by net income, or (ii) that state has jurisdiction based on the corporation's business

activity in that state to subject the corporation to a tax measured by net income regardless

whether that state exercises its jurisdiction. For purposes of this section, "business activity"

includes any activity by a corporation that would establish a taxable nexus pursuant to 15 United

States Code section 381.

(c) Rents and royalties from real or tangible personal property, gains and losses, interest,

dividends, patent and copyright royalties and other kinds of income, to the extent that they

constitute nonapportionable income, less related expenses shall be allocated as provided in

subsections (d) through (h) of this section.

(d) (1) Net rents and royalties from real property located in this State are allocable to

this State.

(2) Net rents and royalties from tangible personal property are allocable to this

State:

a. If and to the extent that the property is utilized in this State, or

b. In their entirety if the corporation's commercial domicile is in this

State and the corporation is not organized under the laws of, or is not

taxable in, the state in which the property is utilized.

(3) The extent of utilization of tangible personal property in a state is determined

by multiplying the rents and royalties by a fraction, the numerator of which is

the number of days of physical location of the property in the state during the

rental or royalty period in the income year and the denominator of which is

the number of days of physical location of the property everywhere during all

rental or royalty periods in the income year. If the physical location of the

property during the rental or royalty period is unknown or unascertainable by

the corporation, tangible personal property is utilized in the state in which the

property was located at the time the rental or royalty payer obtained

possession.

(e) (1) Gains and losses from sales or other disposition of real property located in this

State are allocable to this State.

(2) Gains and losses from sales or other disposition of tangible personal property

are allocable to this State if

a. The property had a situs in this State at the time of the sale, or


b. The corporation's commercial domicile is in this State and the

corporation is not taxable in the state in which the property has a situs.

(3) Gains and losses from sales or other disposition of intangible personal

property are allocable to this State if the corporation's commercial domicile is

in this State.

(f) Interest and net dividends are allocable to this State if the corporation's commercial

domicile is in this State. For purposes of this section, the term "net dividends" means gross

dividend income received less related expenses.

(g) (1) Royalties or similar income received from the use of patents, copyrights,

secret processes and other similar intangible property are allocable to this

State:

a. If and to the extent that the patent, copyright, secret process or other

similar intangible property is utilized in this State, or

b. If and to the extent that the patent, copyright, secret process or other

similar intangible property is utilized in a state in which the taxpayer is

not taxable and the taxpayer's commercial domicile is in this State.

(2) A patent, secret process or other similar intangible property is utilized in a

state to the extent that it is employed in production, fabrication,

manufacturing, processing, or other use in the state or to the extent that a

patented product is produced in the state. If the basis of receipts from such

intangible property does not permit allocation to states or if the accounting

procedures do not reflect states of utilization, the intangible property is

utilized in the state in which the taxpayer's commercial domicile is located.

(3) A copyright is utilized in a state to the extent that printing or other publication

originates in the state. If the basis of receipts from copyright royalties does not

permit allocation to states or if the accounting procedures do not reflect states

of utilization, the copyright is utilized in the state in which the taxpayer's

commercial domicile is located.

(h) The income less related expenses from any other activities producing

nonapportionable income or investments not otherwise specified in this section is allocable to

this State if the business situs of the activities or investments is located in this State.

(i) (Effective for taxable years beginning before January 1, 2016) All apportionable

income of corporations other than public utilities, excluded corporations, and qualified capital

intensive corporations shall be apportioned to this State by multiplying the income by a fraction,

the numerator of which is the property factor plus the payroll factor plus twice the sales factor,

and the denominator of which is four. If the sales factor does not exist, the denominator of the

fraction is the number of existing factors and if the sales factor exists but the payroll factor or the

property factor does not exist, the denominator of the fraction is the number of existing factors

plus one.

(i) (Effective for taxable years beginning on or after January 1, 2016 and before

January 1, 2017) Apportionable Income. – Except as otherwise provided in this section, all

apportionable income of corporations shall be apportioned to this State by multiplying the

income by a fraction, the numerator of which is the property factor plus the payroll factor plus

three times the sales factor, and the denominator of which is five. If the sales factor does not

exist, the denominator of the fraction is the number of existing factors and if the sales factor


exists but the payroll factor or the property factor does not exist, the denominator of the fraction

is the number of existing factors plus two.

(i) (Effective for taxable years beginning on or after January 1, 2017 and before

January 1, 2018) Apportionable Income. – Except as otherwise provided in this section, all

apportionable income of corporations shall be apportioned to this State by multiplying the

income by a fraction, the numerator of which is the property factor plus the payroll factor plus

four times the sales factor, and the denominator of which is six. If the sales factor does not exist,

the denominator of the fraction is the number of existing factors and if the sales factor exists but

the payroll factor or the property factor does not exist, the denominator of the fraction is the

number of existing factors plus three.

(i) (Effective for taxable years beginning on or after January 1, 2018) Apportionable

Income. – Except as otherwise provided in this section, all apportionable income of corporations

shall be apportioned to this State by multiplying the income by the sales factor as determined

under subsection (l) of this section.

(j) (1) (Repealed effective for taxable years beginning on or after January 1,

2018) The property factor is a fraction, the numerator of which is the average

value of the corporation's real and tangible personal property owned or rented

and used in this State during the income year and the denominator of which is

the average value of all the corporation's real and tangible personal property

owned or rented and used during the income year.

(2) Property owned by the corporation is valued at its original cost. Property

rented by the corporation is valued at eight times the net annual rental rate.

Net annual rental rate is the annual rental rate paid by the corporation less any

annual rental rate received by the corporation from subrentals except that

subrentals shall not be deducted when they constitute apportionable income.

Any property under construction and any property the income from which

constitutes nonapportionable income shall be excluded in the computation of

the property factor.

(3) The average value of property shall be determined by averaging the values at

the beginning and end of the income year, but in all cases the Secretary of

Revenue may require the averaging of monthly or other periodic values during

the income year if reasonably required to reflect properly the average value of

the corporation's property. A corporation that ceases its operations in this

State before the end of its income year because of its intention to dissolve or

to relinquish its certificate of authority, or because of a merger, conversion, or

consolidation, or for any other reason whatsoever shall use the real estate and

tangible personal property values as of the first day of the income year and the

last day of its operations in this State in determining the average value of

property, but the Secretary may require averaging of monthly or other periodic

values during the income year if reasonably required to reflect properly the

average value of the corporation's property.

(k) (1) (Repealed effective for taxable years beginning on or after January 1,

2018) The payroll factor is a fraction, the numerator of which is the total

amount paid in this State during the income year by the corporation as

compensation, and the denominator of which is the total compensation paid

everywhere during the income year. All compensation paid to general


executive officers and all compensation paid in connection with

nonapportionable income shall be excluded in computing the payroll factor.

General executive officers shall include the chairman of the board, president,

vice-presidents, secretary, treasurer, comptroller, and any other officers

serving in similar capacities.

(2) Compensation is paid in this State if:

a. The individual's service is performed entirely within the State; or

b. The individual's service is performed both within and without the

State, but the service performed without the State is incidental to the

individual's service within the State; or

c. Some of the service is performed in this State and (i) the base of

operations or, if there is no base of operations, the place from which

the service is directed or controlled is in this State, or (ii) the base of

operations or the place from which the service is directed or controlled

is not in any state in which some part of the service is performed, but

the individual's residence is in this State.

(l) (1) The sales factor is a fraction, the numerator of which is the total sales of the

corporation in this State during the income year, and the denominator of

which is the total sales of the corporation everywhere during the income year.

Notwithstanding any other provision under this Part, the receipts from any

casual sale of property shall be excluded from both the numerator and the

denominator of the sales factor. Where a corporation is not taxable in another

state on its apportionable income but is taxable in another state only because

of nonapportionable income, all sales shall be treated as having been made in

this State.

(2) Sales of tangible personal property are in this State if the property is received

in this State by the purchaser. In the case of delivery of goods by common

carrier or by other means of transportation, including transportation by the

purchaser, the place at which the goods are ultimately received after all

transportation has been completed shall be considered as the place at which

the goods are received by the purchaser. Direct delivery into this State by the

taxpayer to a person or firm designated by a purchaser from within or without

the State shall constitute delivery to the purchaser in this State.

(3) Other sales are in this State if:

a. The receipts are from real or tangible personal property located in this

State; or

b. The receipts are from intangible property and are received from

sources within this State; or

c. The receipts are from services and the income-producing activities are

in this State.

(m) All apportionable income of a railroad company shall be apportioned to this State by

multiplying the income by a fraction, the numerator of which is the "railway operating revenue"

from business done within this State and the denominator of which is the "total railway operating

revenue" from all business done by the company as shown by its records kept in accordance with

the standard classification of accounts prescribed by the Interstate Commerce Commission.


"Railway operating revenue" from business done within this State shall mean "railway

operating revenue" from business wholly within this State, plus the equal mileage proportion

within this State of each item of "railway operating revenue" received from the interstate

business of the company. "Equal mileage proportion" shall mean the proportion which the

distance of movement of property and passengers over lines in this State bears to the total

distance of movement of property and passengers over lines of the company receiving such

revenue. "Interstate business" shall mean "railway operating revenue" from the interstate

transportation of persons or property into, out of, or through this State. If the Secretary of

Revenue finds, with respect to any particular company, that its accounting records are not kept so

as to reflect with exact accuracy such division of revenue by State lines as to each transaction

involving interstate revenue, the Secretary of Revenue may adopt such regulations, based upon

averages, as will approximate with reasonable accuracy the proportion of interstate revenue

actually earned upon lines in this State. Provided, that where a railroad is being operated by a

partnership which is treated as a corporation for income tax purposes and pays a net income tax

to this State, or if located in another state would be so treated and so pay as if located in this

State, each partner's share of the net profits shall be considered as dividends paid by a

corporation for purposes of this Part and shall be so treated for inclusion in gross income,

deductibility, and separate allocation of dividend income.

(n) All apportionable income of a telephone company shall be apportioned to this State

by multiplying the income by a fraction, the numerator of which is gross operating revenue from

local service in this State plus gross operating revenue from toll services performed wholly

within this State plus the proportion of revenue from interstate toll services attributable to this

State as shown by the records of the company plus the gross operating revenue in North Carolina

from other service less the uncollectible revenue in this State, and the denominator of which is

the total gross operating revenue from all business done by the company everywhere less total

uncollectible revenue. Provided, that where a telephone company is required to keep its records

in accordance with the standard classification of accounts prescribed by the Federal

Communications Commission the amounts in such accounts shall be used in computing the

apportionment fraction as provided in this subsection.

(o) All apportionable income of a motor carrier of property shall be apportioned by

multiplying the income by a fraction, the numerator of which is the number of vehicle miles in

this State and the denominator of which is the total number of vehicle miles of the company

everywhere. The words "vehicle miles" shall mean miles traveled by vehicles owned or operated

by the company hauling property for a charge or traveling on a scheduled route.

(p) All apportionable income of a motor carrier of passengers shall be apportioned by

multiplying the income by a fraction, the numerator of which is the number of vehicle miles in

this State and the denominator of which is the total number of vehicle miles of the company

everywhere. The words "vehicle miles" shall mean miles traveled by vehicles owned or operated

by the company carrying passengers for a fare or traveling on a scheduled route.

(q) All apportionable income of a telegraph company shall be apportioned by multiplying

the income by a fraction, the numerator of which is the property factor plus the payroll factor

plus the sales factor and the denominator of which is three.

The property factor shall be as defined in subsection (j) of this section, the payroll factor

shall be as defined in subsection (k) of this section, and the sales factor shall be as defined in

subsection (l) of this section.


(r) (Repealed effective for taxable years beginning on or after January 1, 2018) All

apportionable income of an excluded corporation and of all other public utilities shall be

apportioned by multiplying the income by the sales factor as determined under subsection (l) of

this section.

(s) All apportionable income of an air or water transportation corporation shall be

apportioned by a fraction, the numerator of which is the corporation's revenue ton miles in this

State and the denominator of which is the corporation's revenue ton miles everywhere. The term

"revenue ton mile" means one ton of passengers, freight, mail, or other cargo carried one mile. In

making this computation, a passenger is considered to weigh two hundred pounds.

(s1) (Repealed effective for taxable years beginning on or after January 1, 2018) All

apportionable income of a qualified capital intensive corporation shall be apportioned by

multiplying the income by the sales factor as determined under subsection (l) of this section. A

"qualified capital intensive corporation' is a corporation that satisfies all of the conditions of this

subsection. A corporation that is subject to this subsection must list on its return the property,

payroll, and sales factors it used in determining whether it is a qualified capital intensive

corporation. If the corporation fails to invest one billion dollars ($1,000,000,000) in private funds

within nine years as required by subdivision (2) of this subsection, the benefit of this subsection

expires and the corporation must apportion income as it would otherwise be required to do under

this section absent this subsection. The conditions are:

(1) The corporation's property factor as a percentage of the sum of the factors in

the formula set out in subsection (i) of this section, including the doubling of

the sales factor, exceeds seventy-five percent (75%) or the corporation's

average property factor for the preceding three years as a percentage of the

average sum of the factors in the formula set out in subsection (i) of this

section, including the doubling of the sales factors, for the preceding three

years exceeds seventy-five percent (75%).

(2) The Secretary of Commerce makes a written determination that the

corporation has invested or is expected to invest at least one billion dollars

($1,000,000,000) in private funds to construct a facility in this State within

nine years after the time that construction begins. For the purposes of this

subsection, costs of construction include costs of acquiring and improving

land for the facility, costs for renovations or repairs to existing buildings, and

costs of equipping or reequipping the facility.

(3) The corporation maintains the average number of employees it has at the

facility during the first two years after the facility is placed in service for the

remainder of time in which the corporation must complete the investment

required under subdivision (2) of this subsection.

(4) The facility that satisfies the condition of subdivision (2) of this subsection is

located in a county that was designated as a development tier one or two area

at the time construction of the facility began.

(5) The corporation satisfies a wage standard at the facility that satisfies the

condition of subdivision (2) of this subsection. For the purposes of this

subdivision, the wage standard that must be satisfied is the one established

under G.S. 105-129.83(c).

(6) The corporation provides health insurance for all of its full-time employees at

the facility that satisfies the condition of subdivision (2) of this subsection.


For the purposes of this subdivision, a company provides health insurance if it

satisfies the provisions of G.S. 105-129.83(d).

(t) Repealed by Session Laws 2007-491, s. 2, effective January 1, 2008. For

applicability, see Editor's note.

(t1) Alternative Apportionment Method. – A corporation that believes the statutory

apportionment method that otherwise applies to it under this section subjects a greater portion of

its income to tax than is attributable to its business in this State may make a written request to the

Secretary for permission to use an alternative method. The request must set out the reasons for

the corporation's belief and propose an alternative method.

The statutory apportionment method that otherwise applies to a corporation under this section

is presumed to be the best method of determining the portion of the corporation's income that is

attributable to its business in this State. A corporation has the burden of establishing by clear,

cogent, and convincing proof that the proposed alternative method is a better method of

determining the amount of the corporation's income attributable to the corporation's business in

this State.

The Secretary must issue a written decision on a corporation's request for an alternative

apportionment method. If the decision grants the request, it must describe the alternative method

the corporation is authorized to use and state the tax years to which the alternative method

applies. A decision may apply to no more than three tax years. A corporation may renew a

request to use an alternative apportionment method by following the procedure in this

subsection. A decision of the Secretary on a request for an alternative apportionment method is

final and is not subject to administrative or judicial review. A corporation authorized to use an

alternative method may apportion its income in accordance with the alternative method or the

statutory method. A corporation may not use an alternative apportionment method except upon

written order of the Secretary, and any return in which any alternative apportionment method,

other than the method prescribed by statute, is used without permission of the Secretary is not a

lawful return.

(t2) Repealed by Session Laws 2011-330, s. 5, effective June 27, 2011. (1939, c. 158, s.

311; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 752, s. 3; 1953, c. 1302, s. 4; 1955, c. 1350, s.

18; 1957, c. 1340, s. 4; 1959, c. 1259, s. 4; 1963, c. 1169, s. 2; c. 1186; 1967, c. 1110, s. 3; 1973,

c. 476, s. 193; c. 1287, s. 4; 1981 (Reg. Sess., 1982), c. 1212; 1987, c. 804, s. 2; 1987 (Reg.

Sess., 1988), c. 994, s. 1; 1993, c. 532, s. 12; 1995, c. 350, s. 3; 1996, 2nd Ex. Sess., c. 14, s. 5;

1998-98, s. 69; 1999-369, s. 5.4; 2000-126, s. 5; 2001-327, s. 1(c); 2002-126, s. 30G.1(a);

2003-349, ss. 1.2, 1.3; 2003-416, ss. 5(a)-5(h); 2004-170, s. 15; 2005-435, s. 53; 2007-491, ss. 2,

12; 2009-54, ss. 1, 2, 6; 2009-445, ss. 4, 5; 2010-89, s. 2(a), (b); 2011-330, s. 5; 2013-414, s.

2(b); 2015-241, s. 32.14(a)-(d); 2015-268, s. 10.1(c).)

§ 105-130.5. Adjustments to federal taxable income in determining State net income.

(a) The following additions to federal taxable income shall be made in determining State

net income:

(1) Taxes based on or measured by net income by whatever name called and

excess profits taxes.

(2) Interest paid in connection with income exempt from taxation under this Part.

(3) The contributions deduction allowed by the Code.


(4) Interest income earned on bonds and other obligations of other states or their

political subdivisions, less allowable amortization on any bond acquired on or


(5) The amount by which gains have been offset by the capital loss carryover

allowed under the Code. All gains recognized on the sale or other disposition

of assets must be included in determining State net income or loss in the year

of disposition.

(6) Any amount allowed as a net operating loss deduction under the Code.

(7) Repealed by Session Laws 2001-327, s. 3(a), effective for taxable years

beginning on or after January 1, 2001.


(9) Payments to or charges by a parent, subsidiary or affiliated corporation in

excess of fair compensation in all intercompany transactions of any kind

whatsoever pursuant to the Revenue Laws of this State.

(10) The total amounts allowed under this Chapter during the taxable year as a

credit against the taxpayer's income tax. This subdivision does not apply to a

credit allowed under G.S. 105-130.47. A corporation that apportions part of its

income to this State shall make the addition required by this subdivision after

it determines the amount of its income that is apportioned and allocated to this

State and shall not apply to a credit taken under this Chapter the

apportionment factor used by it in determining the amount of its apportioned

income.

(11) The amount by which the percentage depletion allowance allowed by sections

613 and 613A of the Code for mines, oil and gas wells, and other natural

deposits exceeds the cost depletion allowance for these items under the Code,

except as otherwise provided herein. This subdivision does not apply to

depletion deductions for clay, gravel, phosphate rock, lime, shells, stone, sand,

feldspar, gemstones, mica, talc, lithium compounds, tungsten, coal, peat,

olivine, pyrophyllite, and other solid minerals or rare earths extracted from the

soil or waters of this State. Corporations required to apportion income to

North Carolina shall first add to federal taxable income the amount of all

percentage depletion in excess of cost depletion that was subtracted from the

corporation's gross income in computing its federal income taxes and shall

then subtract from the taxable income apportioned to North Carolina the

amount by which the percentage depletion allowance allowed by sections 613

and 613A of the Code for solid minerals or rare earths extracted from the soil

or waters of this State exceeds the cost depletion allowance for these items.

(12) The amount allowed under the Code for depreciation or as an expense in lieu

of depreciation for a utility plant acquired by a natural gas local distribution

company, to the extent the plant is included in the company's rate base at zero

cost in accordance with G.S. 62-158.

(13) Repealed by Session Laws 2001-427, s. 4(b), effective for taxable years


(14) Royalty payments required to be added by G.S. 105-130.7A, to the extent

deducted in calculating federal taxable income.


(15) through (15b) Repealed by Session Laws 2013-414, s. 34(a), effective August

23, 2013.

(16) The amount excluded from gross income under Subchapter R of Chapter 1 of

the Code.

(17) The amount excluded from gross income under section 199 of the Code.

(18) Repealed by Session Laws 2006-220, s. 1, effective for taxable years

beginning on and after January 1, 2007.

(19) The dividend paid deduction allowed under the Code to a captive REIT, as

defined in G.S. 105-130.12.

(20) The amount of a donation made to a nonprofit organization or a unit of State

or local government for which a credit is claimed under G.S. 105-129.16H.

(21) The amount of income deferred under section 108(i)(1) of the Code from the

discharge of indebtedness in connection with a reacquisition of an applicable

debt instrument.

(22) The amount allowed as a deduction under section 163(e)(5)(F) of the Code for

an original issue discount on an applicable high yield discount obligation.

(23), (23a) Repealed by Session Laws 2013-414, s. 34(a), effective August 23,

2013.

(24) The amount required to be added under G.S. 105-130.5B when the State

decouples from federal accelerated depreciation and expensing.


amount of net interest expense to a related member as determined under G.S.

105-130.7B.

(b) The following deductions from federal taxable income shall be made in determining

State net income:

(1) Interest upon the obligations of the United States or its possessions, to the

extent included in federal taxable income: Provided, interest upon the

obligations of the United States shall not be an allowable deduction unless

interest upon obligations of the State of North Carolina or any of its political

subdivisions is exempt from income taxes imposed by the United States.

(1a) Interest upon the obligations of any of the following, net of related expenses,

to the extent included in federal taxable income:

a. This State, a political subdivision of this State, or a commission, an

authority, or another agency of this State or of a political subdivision

of this State.

b. A nonprofit educational institution organized or chartered under the

laws of this State.

(2) Payments received from a parent, subsidiary or affiliated corporation in excess

of fair compensation in intercompany transactions which in the determination

of the net income or net loss of such corporation were not allowed as a

deduction under the Revenue Laws of this State.


(3a) (Effective for taxable years beginning before January 1, 2016) Dividends

treated as received from sources outside the United States as determined under

section 862 of the Code, net of related expenses, to the extent included in

federal taxable income. Notwithstanding the proviso in subdivision (c)(3) of


this section, the netting of related expenses shall be calculated in accordance

with subdivision (c)(3) of this section and G.S. 105-130.6A.

(3a) (Effective for taxable years beginning on or after January 1, 2016)

Dividends treated as received from sources outside the United States as

determined under section 862 of the Code, net of related expenses, to the

extent included in federal taxable income. Notwithstanding the proviso in

subdivision (c)(3) of this section, the netting of related expenses shall be

calculated in accordance with subdivision (c)(3) of this section.

(3b) Any amount included in federal taxable income under section 78 or section

951 of the Code, net of related expenses.

(4) (Effective for taxable years beginning before January 1, 2015) Losses in

the nature of net economic losses sustained by the corporation in any or all of

the 15 preceding years pursuant to the provisions of G.S. 105-130.8. A

corporation required to allocate and apportion its net income under the

provisions of G.S. 105-130.4 shall deduct its allocable and apportionable net

economic loss only from total income allocable and apportionable to this State

pursuant to the provisions of G.S. 105-130.8.

(4) (Effective for taxable years beginning on or after January 1, 2015 and

expiring for taxable years beginning on or after January 1, 2030) Any

unused portion of a net economic loss as allowed under G.S. 105-130.8A(e).

This subdivision expires for taxable years beginning on or after January 1,

2030.

(4a) (Effective for taxable years beginning on or after January 1, 2015) A State

net loss as allowed under G.S. 105-130.8A. A corporation may deduct its

allocable and apportionable State net loss only from total income allocable

and apportionable to this State.

(5) Contributions or gifts made by any corporation within the income year to the

extent provided under G.S. 105-130.9.


2016) Amortization in excess of depreciation allowed under the Code on the

cost of any sewage or waste treatment plant, and facilities or equipment used

for purposes of recycling or resource recovery of or from solid waste, or for

purposes of reducing the volume of hazardous waste generated as provided in

G.S. 105-130.10.


2016) Depreciation of emergency facilities acquired prior to January 1, 1955.

Any corporation shall be permitted to depreciate any emergency facility, as

such is defined in section 168 of the Code, over its useful life, provided such

facility was acquired prior to January 1, 1955, and no amortization has been

claimed on such facility for State income tax purposes.

(8) The amount of losses realized on the sale or other disposition of assets not

allowed under section 1211(a) of the Code. All losses recognized on the sale

or other disposition of assets must be included in determining State net

income or loss in the year of disposition.

(9) With respect to a shareholder of a regulated investment company, the portion

of undistributed capital gains of such regulated investment company included


in such shareholder's federal taxable income and on which the federal tax paid

by the regulated investment company is allowed as a credit or refund to the

shareholder under section 852 of the Code.


(11) (Effective for taxable years beginning before January 1, 2016) If a

deduction for an ordinary and necessary business expense was required to be

reduced or was not allowed under the Code because the corporation claimed a

federal tax credit against its federal income tax liability for the income year in

lieu of a deduction, the amount by which the deduction was reduced and the

amount of the deduction that was disallowed. This deduction is allowed only

to the extent that a similar credit is not allowed by this Chapter for the

amount.

(11) (Effective for taxable years beginning on or after January 1, 2016) If a

deduction for an ordinary and necessary business expense was required to be

reduced or was not allowed under the Code because the corporation claimed a

federal tax credit against its federal income tax liability for the income year in

lieu of a deduction, the amount by which the deduction was reduced and the

amount of the deduction that was disallowed.


2016) Reasonable expenses, in excess of deductions allowed under the Code,

paid for reforestation and cultivation of commercially grown trees; provided,

that this deduction shall be allowed only to those corporations in which the

real owners of all the shares of such corporation are natural persons actively

engaged in the commercial growing of trees, or the spouse, siblings, or parents

of such persons. Provided, further, that in no case shall a corporation be

allowed a deduction for the same reforestation or cultivation expenditure more

than once.


2016) The eligible income of an international banking facility to the extent

included in determining federal taxable income, determined as follows:

a. "International banking facility" shall have the same meaning as is set

forth in the laws of the United States or regulations of the board of

governors of the federal reserve system.

b. The eligible income of an international banking facility for the taxable

year shall be an amount obtained by multiplying State taxable income

as determined under G.S. 105-130.3 (determined without regard to

eligible income of an international banking facility and allocation and

apportionment, if applicable) for such year by a fraction, the

denominator of which shall be the gross receipts for such year derived

by the bank from all sources, and the numerator of which shall be the

adjusted gross receipts for such year derived by the international

banking facility from:

1. Making, arranging for, placing or servicing loans to foreign

persons substantially all the proceeds of which are for use

outside the United States;


2. Making or placing deposits with foreign persons which are

banks or foreign branches of banks (including foreign

subsidiaries or foreign branches of the taxpayer) or with other

international banking facilities; or

3. Entering into foreign exchange trading or hedging transactions

related to any of the transactions described in this paragraph.

c. The adjusted gross receipts shall be determined by multiplying the

gross receipts of the international banking facility by a fraction the

numerator of which is the average amount for the taxable year of all

assets of the international banking facility which are employed outside

the United States and the denominator of which is the average amount

for the taxable year of all assets of the international banking facility.

d. For the purposes of this subsection the term "foreign person" means:

1. An individual who is not a resident of the United States;

2. A foreign corporation, a foreign partnership or a foreign trust,

as defined in section 7701 of the Code, other than a domestic

branch thereof;

3. A foreign branch of a domestic corporation (including the

taxpayer);

4. A foreign government or an international organization or an

agency of either, or

5. An international banking facility.

For purposes of this paragraph, the terms "foreign" and "domestic"

shall have the same meaning as set forth in section 7701 of the Code.

(14) The amount by which the basis of a depreciable asset is required to be reduced

under the Code for federal tax purposes because of a tax credit allowed

against the corporation's federal income tax liability or because of a grant

allowed under section 1603 of the American Recovery and Reinvestment Tax

Act of 2009, P.L. 111-3. This deduction may be claimed only in the year in

which the Code requires that the asset's basis be reduced. In computing gain

or loss on the asset's disposition, this deduction shall be considered as

depreciation.


2016) The amount paid during the income year, pursuant to 7 U.S.C. §

1445-2, as marketing assessments on tobacco grown by the corporation in

North Carolina.

(16) The amount of natural gas expansion surcharges collected by a natural gas

local distribution company under G.S. 62-158.

(17) To the extent included in federal taxable income, 911 charges imposed under

G.S. 143B-1403 and remitted to the 911 Fund under that section.


2016) Interest, investment earnings, and gains of a trust, the settlors of which

are two or more manufacturers that signed a settlement agreement with this

State to settle existing and potential claims of the State against the

manufacturers for damages attributable to a product of the manufacturers, if

the trust meets all of the following conditions:


a. The purpose of the trust is to address adverse economic consequences

resulting from a decline in demand of the manufactured product

potentially expected to occur because of market restrictions and other

provisions in the settlement agreement.

b. A court of this State approves and retains jurisdiction over the trust.

c. Certain portions of the distributions from the trust are made in

accordance with certifications that meet the criteria in the agreement

creating the trust and are provided by a nonprofit entity, the governing

board of which includes State officials.


2016) To the extent included in federal taxable income, the amount paid to the

taxpayer during the taxable year from the Hurricane Floyd Reserve Fund in

the Office of State Budget and Management for hurricane relief or assistance,

but not including payments for goods or services provided by the taxpayer.

(20) Royalty payments received from a related member who added the payments to

income under G.S. 105-130.7A for the same taxable year.

(21) through (21b) Repealed by Session Laws 2013-414, s. 34(a), effective August

23, 2013.


2016) To the extent included in federal taxable income, the amount paid to the

taxpayer during the taxable year from the Disaster Relief Reserve Fund in the

Office of State Budget and Management for hurricane relief or assistance, but

not including payments for goods or services provided by the taxpayer.

(23) A dividend received from a captive REIT, as defined in G.S. 105-130.12.

(24) (Expiring for taxable years beginning on or after January 1, 2015) Five

percent (5%) of the gross purchase price of a qualified sale of a manufactured

home community. A qualified sale is a transfer of land comprising a

manufactured home community in a single purchase to a group composed of a

majority of the manufactured home community leaseholders or to a nonprofit

organization that represents such a group. To be eligible for this deduction, a

taxpayer must give notice of the sale to the North Carolina Housing Finance

Agency under G.S. 42-14.3.

(25) The amount added to federal taxable income as deferred income under section

108(i)(1) of the Code. This deduction applies to taxable years beginning on or


(26), (26a) Repealed by Session Laws 2013-414, s. 34(a), effective August 23,

2013.

(27) The amount allowed as a deduction under G.S. 105-130.5B as a result of an

add-back for federal accelerated depreciation and expensing.


amount of qualified interest expense to a related member as determined under

G.S. 105-130.7B.

(c) The following other adjustments to federal taxable income shall be made in

determining State net income:

(1) In determining State net income, no deduction shall be allowed for annual

amortization of bond premiums applicable to any bond acquired prior to


January 1, 1963. The amount of premium paid on any such bond shall be

deductible only in the year of sale or other disposition.

(2) Federal taxable income must be increased or decreased to account for any

difference in the amount of depreciation, amortization, or gains or losses

applicable to property which has been depreciated or amortized by use of a

different basis or rate for State income tax purposes than used for federal

income tax purposes prior to the effective date of this Part.

(3) (Effective for taxable years beginning before January 1, 2016) No

deduction is allowed for any direct or indirect expenses related to income not

taxed under this Part; provided, no adjustment shall be made under this

subsection for adjustments addressed in G.S. 105-130.5(a) and (b). G.S.

105-130.6A applies to the adjustment for expenses related to dividends

received that are not taxed under this Part.

(3) (Effective for taxable years beginning on or after January 1, 2016) No

deduction is allowed for any direct or indirect expenses related to income not

taxed under this Part; provided, no adjustment shall be made under this

subsection for adjustments addressed in G.S. 105-130.5(a) and (b). For

dividends received that are not taxed under this Part, the adjustment for

expenses may not exceed an amount equal to fifteen percent (15%) of the

dividends.

(4) The taxpayer shall add to federal taxable income the amount of any recovery

during the taxable year not included in federal taxable income, to the extent

the taxpayer's deduction of the recovered amount in a prior taxable year

reduced the taxpayer's tax imposed by this Part but, due to differences

between the Code and this Part, did not reduce the amount of the taxpayer's

tax imposed by the Code. The taxpayer may deduct from federal taxable

income the amount of any recovery during the taxable year included in federal

taxable income under section 111 of the Code, to the extent the taxpayer's

deduction of the recovered amount in a prior taxable year reduced the

taxpayer's tax imposed by the Code but, due to differences between the Code

and this Part, did not reduce the amount of the taxpayer's tax imposed by this

Part.


2016) A savings and loan association may deduct interest earned on deposits

at the Federal Home Loan Bank of Atlanta, or its successor, to the extent

included in federal taxable income.


(e) Notwithstanding any other provision of this section, any recapture of depreciation

required under the Code must be included in a corporation's State net income to the extent

required for federal income tax purposes.

(f) Expired. (1967, c. 1110, s. 3; 1969, cc. 1113, 1124; 1971, c. 820, s. 1; c. 1206, s. 1;

1973, c. 1287, s. 4; 1975, c. 764, s. 4; 1977, 2nd Sess., c. 1200, s. 1; 1979, c. 179, s. 2; c. 801, s.

32; 1981, c. 704, s. 20; c. 855, s. 1; 1983, c. 61; c. 713, ss. 70-73, 82, 83; 1985, c. 720, s. 1; c.

791, s. 43; 1985 (Reg. Sess., 1986), c. 825; 1987, c. 89; c. 637, s. 1; c. 778, ss. 2, 3; c. 804, s. 3;

1991, c. 598, ss. 3, 10; 1991 (Reg. Sess., 1992), c. 857, s. 1; 1993 (Reg. Sess., 1994), c. 745, ss.

4, 5; 1995, c. 509, s. 50; 1996, 2nd Ex. Sess., c. 14, ss. 4, 10; 1997-439, s. 1; 1998-98, ss. 1(c), 4,


69; 1998-158, s. 5; 1998-171, s. 7; 1999-333, s. 2; 1999-337, s. 1; 1999-463, Ex. Sess., s. 4.6(b);

2000-140, s. 93.1(a); 2000-173, s. 19(c); 2001-327, ss. 1(d), (e), 3(a), (b); 2001-424, s. 12.2(b);

2001-427, ss. 4(b), 10(a); 2002-72, s. 14; 2002-126, ss. 30C.2(a), 30C.2(c); 2002-136, ss. 1, 4;

2003-284, s. 37A.3; 2003-349, s. 1.1; 2005-1, s. 5.7(b); 2005-276, ss. 35.1(b), 39.1(e); 2006-220,

s. 1; 2007-323, ss. 31.18(a), (b); 2007-383, s. 5; 2007-397, s. 13(b); 2008-107, ss. 28.1(c), (d),

(g), 28.25(b), 28.27(a); 2008-134, s. 2(b); 2009-451, s. 27A.6(c), (d); 2010-89, s. 1; 2011-5, ss.

2(a), (b), 3(a), (b); 2011-330, s. 11; 2012-79, s. 1.1; 2013-10, ss. 2(a), (b), 3(a), (b); 2013-414, s.

34(a); 2014-3, ss. 1.1(a), 14.3; 2015-6, s. 2.7; 2015-241, ss. 7A.3, 32.13(c), (d).)

§ 105-130.5A. Secretary's authority to adjust net income or require a combined return.

(a) Notice. – When the Secretary has reason to believe that any corporation so conducts

its trade or business in such manner as to fail to accurately report its State net income properly

attributable to its business carried on in the State through the use of transactions that lack

economic substance or are not at fair market value between members of an affiliated group of

entities, the Secretary may, upon written notice to the corporation, require any information

reasonably necessary to determine whether the corporation's intercompany transactions have

economic substance and are at fair market value and for the accurate computation of the

corporation's State net income properly attributable to its business carried on in the State. The

corporation must provide the information requested within 90 days of the date of the notice.

(b) Adjust Net Income. – If upon review of the information provided, the Secretary finds

as a fact that the corporation's intercompany transactions lack economic substance or are not at

fair market value, the Secretary may redetermine the State net income of the corporation

properly attributable to its business carried on in the State under this section by (i) adding back,

eliminating, or otherwise adjusting intercompany transactions to accurately compute the

corporation's State net income properly attributable to its business carried on in the State, or, if

such adjustments are not adequate under the circumstances to redetermine State net income, (ii)

requiring the corporation to file a return that reflects the net income on a combined basis of all

members of its affiliated group that are conducting a unitary business. The Secretary shall

consider and be authorized to use any reasonable method proposed by the corporation for

redetermining its State net income attributable to its business carried on in the State. In

determining whether the corporation's intercompany transactions lack economic substance or are

not at fair market value, the Secretary shall consider each taxable year separately.

(c) Voluntary Redetermination. – In addition to the authority granted under subsection

(b) of this section, if the Secretary has reason to believe that any corporation's State net income

properly attributable to its business carried on in this State is not accurately reported on a

separate return required by this Part because of intercompany transactions, without making a

finding that those transactions lack economic substance or are not at fair market value, the

Secretary and the corporation may jointly determine and agree to an alternative filing

methodology that accurately reports State net income. The Secretary is authorized to allow any

reasonable method for redetermining the corporation's State net income attributable to its

business carried on in this State.

(d) Combined Return. – If the Secretary finds as a fact that a combined return is required,

the Secretary may, upon written notice to the corporation, require the corporation to submit the

combined return, and the corporation shall submit the combined return within 90 days of the date

of the notice. The submission by the corporation of the combined return required by the

Secretary shall not be deemed to be a return or construed as an agreement by the corporation that


an assessment based on the combined return is correct or that additional tax is due by the

Secretary's deadline for submitting the combined return. The Secretary or the corporation may

propose a combination of fewer than all members of the unitary group, and the Secretary shall be

authorized to consider whether such proposed combination is a reasonable means of

redetermining State net income; provided, however, the Secretary shall not require a combination

of fewer than all members of the unitary group without the consent of the corporation.

(e) Written Statement of Findings. – If the Secretary makes an adjustment or requires a

combined return under this section, the Secretary shall provide the corporation with a written

statement containing detail of the facts, circumstances, and reasons for which the Secretary has

found as a fact that the corporation did not accurately report its State net income properly

attributable to its business carried on in the State and the Secretary's proposed method for

computation of the corporation's State net income no later than 90 days following the issuance of

a proposed assessment as provided in this section.

(f) Members of Affiliated Group. – The Secretary may require a combined return under

this section regardless of whether the members of the affiliated group are or are not doing

business in this State.

(g) Economic Substance. – A transaction has economic substance if (i) the transaction, or

the series of transactions of which the transaction is a part, has one or more reasonable business

purposes other than the creation of State income tax benefits and (ii) the transaction, or the series

of transactions of which the transaction is a part, has economic effects beyond the creation of

State income tax benefits. In determining whether a transaction has economic substance, all of

the following apply:

(1) Reasonable business purposes and economic effects include, but are not

limited to, any material benefit from the transaction other than State income

tax benefits not allowable under subdivision (3) of this subsection.

(2) In determining whether to require a combined return, whether the transaction

has economic effects beyond the creation of State income tax benefits may be

satisfied by demonstrating material business activity of the entities involved in

the transaction.

(3) If State income tax benefits resulting from a transaction, or a series of

transactions of which the transaction is a part, are consistent with legislative

intent, such State income tax benefits shall be considered in determining

whether such transaction has business purpose and economic substance.

(4) Centralized cash management of an affiliated group as defined in subsection

(j) of this section shall not constitute evidence of an absence of economic

substance.

(5) Achieving a financial accounting benefit shall not be taken into account as a

reasonable business purpose for entering into a transaction if the origin of

such financial accounting benefit is a reduction of State income tax.

(h) Allocation of Income and Deductions. – In determining whether transactions between

members of the affiliated group of entities are not at fair market value, the Secretary shall apply

the standards contained in the regulations adopted under section 482 of the Code.

(i) Apportionment. – If the Secretary requires a combined return under this section, the

combined State net income of the corporation and the members of the affiliated group of entities

shall be apportioned to this State by use of an apportionment formula that accurately reports the

State net income properly attributable to the corporation's business carried on in the State and


which fairly reflects the apportionment formula in G.S. 105-130.4 applicable to the corporation

and each member of the affiliated group included in the combined return.

(j) Affiliated Group Defined. – For purposes of this section, an affiliated group is a

group of two or more corporations or noncorporate entities in which more than fifty percent

(50%) of the voting stock of each member corporation or ownership interest of each member

noncorporate entity is directly or indirectly owned or controlled by a common owner or owners,

either corporate or noncorporate, or by one or more of the member corporations or noncorporate

entities. Nothing in this subsection shall be construed to limit or negate the Secretary's authority

to add back, eliminate, or otherwise adjust intercompany transactions involving the listed entities

to accurately compute the corporation's State net income properly attributable to its business

carried on in the State, as provided in subsection (b) of this section.

The following entities shall not be included in a combined return:

(1) A corporation not required to file a federal income tax return.

(2) An insurance company, other than a captive insurance company, (i) which is

subject to tax under Article 8B of this Chapter, (ii) whose premiums are

subject to tax under Article 21 of Chapter 58 or a similar tax in another state,

(iii) which is licensed as a reinsurance company, (iv) which is a life insurance

company as defined in Section 816 of the Code, or (v) which is an insurance

company subject to tax imposed by Section 831 of the Code. A "captive

insurance company" means an insurer that is part of an affiliated group where

the insurer receives more than fifty percent (50%) of its net written premiums

or other amounts received as compensation for insurance from members of the

affiliated group.

(3) A corporation exempt from taxation under section 501 of the Code.

(4) An S corporation.

(5) A foreign corporation as defined in section 7701 of the Code, other than a

domestic branch thereof.

(6) A partnership, limited liability company, or other entity not taxed as a

corporation.

(7) A corporation with at least eighty percent (80%) of its gross income from all

sources in the tax year being active foreign business income as defined in

section 861(c)(1)(B) of the Code in effect as of July 1, 2009.

(k) Proposed Assessment or Refund. – If the Secretary redetermines the State net income

of the corporation in accordance with this section by adjusting the State net income of the

corporation or requiring a combined return, the Secretary shall issue a proposed assessment or

refund upon making such redetermination. The procedures for a proposed assessment or a refund

in Article 9 of Chapter 105 shall be applicable to proposed assessments and refunds made under

this section.

(l) Penalties. – If a combined return required by this section is not timely submitted by a

corporation, then the corporation is subject to the penalties provided in G.S. 105-236(a)(3).

Penalties shall not be imposed on an assessment under this section except as expressly authorized

in this section and in G.S. 105-236(a)(5)f.

(m) Advice. – A corporation may request in writing from the Secretary specific advice

regarding whether a redetermination of the corporation's State net income or a combined return

would be required under this section under certain facts and circumstances. The Secretary may

request information from the taxpayer that is required to provide the specific advice. The


Secretary shall provide the specific advice within 120 days of the receipt of the requested

information from the taxpayer. G.S. 105-264 governs the effect of this advice.

(n) Extension. – The Secretary and the taxpayer may extend any time limit contained in

this section by mutual agreement.

(o) Other Tax Adjustments. – Nothing in this section shall be construed to limit or negate

the Secretary's authority to make tax adjustments as otherwise permitted by law, except that the

Secretary shall not make adjustments pursuant to this section that limit a corporation's options

for reporting royalty payments under G.S. 105-130.7A.

(p) Appeals. – If the corporation appeals a final determination by the Department under

this section to the Office of Administrative Hearings in a contested tax case, the administrative

law judge shall review de novo (i) whether the separate income tax returns submitted by the

taxpayer fail to report State net income properly attributable to its business carried on in this

State through the use of intercompany transactions that lack economic substance or are not at fair

market value between members of an affiliated group of entities; (ii) whether the Department's

means of determining the corporation's State net income under this section is an appropriate

means of determining the corporation's State net income properly attributable to this State; and

(iii) if a combined return is required by the Department, whether adjustments other than

requiring the corporation to file a return on a combined basis are adequate under the

circumstances to redetermine State net income. (2011-390, s. 2; 2011-411, s. 8(a), (b).)

§ 105-130.5B. Adjustments when State decouples from federal accelerated depreciation

and expensing.

(a) Special Accelerated Depreciation. – A taxpayer who takes a special accelerated

depreciation deduction for property under section 168(k) or 168(n) of the Code must add to the

taxpayer's federal taxable income eighty-five percent (85%) of the amount taken for that year

under those Code provisions. A taxpayer is allowed to deduct twenty percent (20%) of the

add-back in each of the first five taxable years following the year the taxpayer is required to

include the add-back in income.

(b) 2009 Depreciation Exception. – A taxpayer who placed property in service during the

2009 taxable year and whose North Carolina taxable income for the 2009 taxable year reflected a

special accelerated depreciation deduction allowed for the property under section 168(k) of the

Code must add eighty-five percent (85%) of the amount of the special accelerated depreciation

deduction to its federal taxable income for the 2010 taxable year. A taxpayer is allowed to deduct

this add-back under subsection (a) of this section as if it were for property placed in service in

2010.

(c) Section 179 Expense. – For purposes of this subdivision, the definition of section 179

property has the same meaning as under section 179 of the Code as of January 1, 2015. A

taxpayer who places section 179 property in service during a taxable year listed in the table

below must add to the taxpayer's federal taxable income eighty-five percent (85%) of the amount

by which the taxpayer's expense deduction under section 179 of the Code exceeds the dollar and

investment limitation listed in the table below for the taxable year.

A taxpayer is allowed to deduct twenty percent (20%) of the add-back in each of the first five

taxable years following the year the taxpayer is required to include the add-back in income.

Taxable Year of Dollar Limitation Investment Limitation

85% Add-Back

2010 $250,000 $800,000


2011 $250,000 $800,000

2012 $250,000 $800,000

2013 $25,000 $200,000

2014 $25,000 $200,000

(d) Asset Basis. – The adjustments made in this section do not result in a difference in

basis of the affected assets for State and federal income tax purposes, except as modified in

subsection (e) of this section.

(e) Bonus Asset Basis. – In the event of an actual or deemed transfer of an asset

occurring on or after January 1, 2013, wherein the tax basis of the asset carries over from the

transferor to the transferee for federal income tax purposes, the transferee must add any

remaining deductions allowed under subsection (a) of this section to the basis of the transferred

asset and depreciate the adjusted basis over any remaining life of the asset. Notwithstanding the

provisions of subsection (a) of this section, the transferor is not allowed any remaining future

bonus depreciation deductions associated with the transferred asset.

(f) Prior Transactions. – For any transaction meeting both the requirements of subsection

(e) of this section prior to January 1, 2013, and the conditions of this subsection, the transferor

and transferee can make an election to make the basis adjustment allowed in that subsection on

the transferee's 2013 tax return. If the asset has been disposed of or has no remaining useful life

on the books of the transferee, the remaining bonus depreciation deduction may be allowed on

the transferee's 2013 tax return. For this subsection to apply, the following conditions must be

met:

(1) The transferor has not taken the bonus depreciation deduction on a prior

return.

(2) The transferor certifies in writing to the transferee that the transferor will not

take any remaining deductions allowed under subsection (a) of this section for

tax years beginning on or after January 1, 2013, for depreciation associated

with the transferred asset.

(g) Tax Basis. – For transactions described in subsections (e) or (f) of this section, federal

taxable income must be increased or decreased to account for any difference in the amount of

depreciation, amortization, or gains or losses applicable to the property that has been depreciated

or amortized by use of a different basis or rate for State income tax purposes than used for

federal income tax purposes. (2013-414, s. 34(b); 2014-3, s. 2.1(a); 2015-2, s. 1.2(a).)


Subsidiary and affiliated corporations.

The net income of a corporation doing business in this State that is a parent, subsidiary, or

affiliate of another corporation shall be determined by eliminating all payments to or charges by

the parent, subsidiary, or affiliated corporation in excess of fair compensation in all

intercompany transactions of any kind whatsoever. If the Secretary finds as a fact that a report by

a corporation does not disclose the true earnings of the corporation on its business carried on in

this State, the Secretary may require the corporation to file a consolidated return of the entire

operations of the parent corporation and of its subsidiaries and affiliates, including its own

operations and income. The Secretary shall determine the true amount of net income earned by

such corporation in this State. The combined net income of the corporation and of its parent,

subsidiaries, and affiliates shall be apportioned to this State by use of the applicable

apportionment formula required to be used by the corporation under G.S. 105-130.4. The return


shall include in the apportionment formula the property, payrolls, and sales of all corporations

for which the return is made. For the purposes of this section, a corporation is considered a

subsidiary of another corporation when, directly or indirectly, it is subject to control by the other

corporation by stock ownership, interlocking directors, or by any other means whatsoever

exercised by the same or associated financial interests, whether the control is direct or through

one or more subsidiary, affiliated, or controlled corporations. A corporation is considered an

affiliate of another corporation when both are directly or indirectly controlled by the same parent

corporation or by the same or associated financial interests by stock ownership, interlocking

directors, or by any other means whatsoever, whether the control is direct or through one or more

subsidiary, affiliated, or controlled corporations. The secretary may require a consolidated return

under this section regardless of whether the parent or controlling corporation or interests or its

subsidiaries or affiliates, other than the taxpayer, are or are not doing business in this State.

If a consolidated return required by this section is not filed within 60 days after it is

demanded, then the corporation is subject to the penalties provided in G.S. 105-230 and G.S.

105-236.

The parent, subsidiary, or affiliated corporation must incorporate in its return required under

this section information needed to determine the net income taxable under this Part, and must

furnish any additional information the Secretary requires. If the return does not contain the

information required or the additional information requested is not furnished within 30 days after

it is demanded, the corporation is subject to the penalties provided in G.S. 105-230 and G.S.

105-236.

If the Secretary finds that the determination of the income of a parent, subsidiary, or

affiliated corporation under a consolidated return will produce a greater or lesser figure than the

amount of income earned in this State, the Secretary may readjust the determination by

reasonable methods of computation to make it conform to the amount of income earned in this

State. If the corporation contends the figure produced is greater than the earnings in this State, it

must file with the Secretary within 30 days after notice of the determination a statement of its

objections and of an alternative method of determination. The Secretary must consider the

statement in determining the income earned in this State. The findings and conclusions of the

Secretary shall be presumed to be correct and shall not be set aside unless shown to be plainly

wrong.

In order to provide clarity for taxpayers, the Secretary may adopt rules in accordance with

G.S. 105-262 that describe facts and circumstances under which the Secretary will require a

corporation to file a consolidated or combined return. The adoption of these rules does not limit

the Secretary's authority to require a consolidated or combined return under sets of facts and

circumstances not described in the rules when the Secretary finds as a fact that a report by a

corporation does not disclose the true earnings of the corporation on its business carried on in

this State. (1939, c. 158, s. 3181/2; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 708, s. 4; 1959,

c. 1259, ss. 4, 8; 1967, c. 1110, s. 3; 1971, c. 1223, s. 1; 1973, c. 476, s. 193; 1998-98, s. 69;

1998-212, s. 29A.14(f); 2010-31, s. 31.10(d); 2011-390, s. 1; 2011-411, s. 8(b).)

§ 105-130.6A. (Repealed effective for taxable years beginning on or after January 1, 2016)

Adjustment for expenses related to dividends.

(a) Definitions. – The definitions in G.S. 105-130.2 govern the determination of whether

a corporation is a subsidiary or an affiliate of another corporation. In addition, the following

definitions apply in this section:


(1) Affiliated group. – A group that includes a corporation, all other corporations

that are affiliates or subsidiaries of that corporation, and all other corporations

that are affiliates or subsidiaries of another corporation in the group.

(2) Bank holding company. – A holding company with an affiliate that is subject

to the privilege tax on banks levied in G.S. 105-102.3.

(3) Dividends. – Dividends received that are not taxed under this Part.

(4) Electric power holding company. – A holding company with an affiliate or a

subsidiary that is engaged in the business of producing electric power.

(5) Expense adjustment. – The adjustment required by G.S. 105-130.5(c)(3) for

expenses related to dividends not taxed under this Part.

(6) Holding company. – Defined in G.S. 105-120.2.

(b) General Rule. – For corporations other than bank holding companies and electric

power holding companies, the adjustment under G.S. 105-130.5(c)(3) for expenses related to

dividends not taxed under this Part may not exceed an amount equal to fifteen percent (15%) of

the dividends.

(c) Bank Holding Companies. – For bank holding companies the adjustment under G.S.

105-130.5(c)(3) for expenses related to dividends not taxed under this Part may not exceed an

amount equal to twenty percent (20%) of the dividends.

(d) Electric Power Holding Companies. – For electric power holding companies, the

adjustment under G.S. 105-130.5(c)(3) for expenses related to dividends not taxed under this Part

may not exceed an amount equal to fifteen percent (15%) of its total interest expenses.

(e) Cap for Bank Holding Companies. – After calculating the expense adjustment as

provided in subsection (c) of this section, each bank holding company must calculate the amount

of additional tax that results from the expense adjustments for the holding company and for

every corporation in the holding company's affiliated group for the taxable year. If the expense

adjustments result in additional tax exceeding eleven million dollars ($11,000,000) for a taxable

year for the affiliated group, the affiliated group may reduce the amount of the expense

adjustment so that the resulting additional tax does not exceed this maximum. This maximum

applies once to each affiliated group each taxable year, whether or not the group includes more

than one bank holding company.

The members of the affiliated group may allocate this reduction among themselves in their

discretion. In order to take this reduction, each member of the affiliated group that is required to

file a return under this Part and that has dividends for the taxable year must provide a schedule

with its return that lists every member of the group that has dividends, the amount of the

dividends, and whether the member is a bank holding company. In addition, the schedule must

show the expense adjustments for those members whose additional tax as a result of the expense

adjustment constitutes the maximum amount. In addition, each member must provide any other

documentation required by the Secretary.

If the expense adjustment for an affiliated group is reduced under this subsection, and the

return of a member of the group is later changed in a manner that reduces below the maximum

the amount of additional tax for the group resulting from the expense adjustment, the Secretary

may increase the expense adjustment for any member of the group in order to increase to the

maximum the amount of additional tax for the group resulting from the expense adjustment. In

this situation, the amount of the increase is considered a forfeited tax benefit with respect to the

affiliated group for the purposes of G.S. 105-241.8. The date of the forfeiture is the date of the

change that triggers the Secretary's authority to increase the expense adjustment. Any member


whose expense adjustment the Secretary increases is liable for interest on the amount of the

increase at the rate established under G.S. G.S. 105-241.21 computed from the date the taxes

would have been due if the expense adjustment had been calculated correctly on the original

return. The amount of the increase and the interest are due 60 days after the date of the forfeiture.

A taxpayer that fails to pay the amount of the increase and interest by the due date is subject to

the penalties provided in G.S. 105-236.

(f) Credits for Bank Holding Companies. – If the affiliated group of which a bank

holding company is a member is eligible for the reduction provided in subsection (e) of this

section for a taxable year, the affiliated group is also eligible for a credit equal to two million

dollars ($2,000,000). If the affiliated group of which a bank holding company is a member is not

eligible for the reduction provided in subsection (e) of this section for a taxable year, the

affiliated group is eligible for a credit equal to the amount of additional tax that results from its

expense adjustments in excess of the amount of additional tax that would result from the expense

adjustments if the expense adjustment of any bank holding company in the group were equal to

fifteen percent (15%) of the holding company's dividends for that taxable year.

A credit allowed by this subsection may be taken in four equal, annual installments

beginning with the later of the following taxable year or the taxpayer's taxable year beginning in

2003. The members of the affiliated group may allocate a credit allowed by this subsection

among themselves in their discretion.

(g) Credit for Electric Power Holding Companies. – After calculating the adjustment for

expenses related to dividends under G.S. 105-130.5(c)(3), each electric power holding company

must calculate the amount of additional tax under this Part that results from the expense

adjustment for the taxable year. The electric power holding company is allowed a credit for the

following taxable year equal to one-half of this amount of additional tax.

As an alternative to taking this credit against its own tax liability, an electric power holding

company may elect to allocate the credit among the members of its affiliated group. In this case,

the credit must be taken in four equal installments beginning in the later of the following taxable

year or the taxable year for which the taxpayer's final return is due in 2004.

(h) Limitation on Credits. – The credits provided in this section are allowed against the

tax levied in this Part and the franchise tax levied in Article 3 of this Chapter. A taxpayer may

claim a credit against only one of the taxes against which it is allowed. Each taxpayer must elect

the tax against which the credit will be taken when filing the return on which the first installment

of the credit is claimed. This election is binding. All installments and carryforwards of the credit

must be taken against the same tax.

In order for a member of an affiliated group to take a credit, each member of the affiliated

group that is required to file a return under this Part or under Article 3 of this Chapter must

attach a schedule to its return that shows for every member of the group the amount of the credit

taken by it, the tax against which it is taken, and the amount of the resulting tax. In addition, each

member must provide any other documentation required by the Secretary.

A credit allowed in this section may not exceed the amount of tax against which it is taken

for the taxable year reduced by the sum of all credits allowable, except tax payments made by or

on behalf of the taxpayer. Any unused portion of the credit may be carried forward to succeeding

taxable years. (2002-136, s. 2; 2007-491, s. 13; 2013-316, s. 4.1(b); 2013-414, s. 36; 2015-241,

s. 32.13(e).)

§ 105-130.7: Repealed by Session Laws 2003-349, s. 1.1, effective January 1, 2003.


§ 105-130.7A. Royalty income reporting option.

(a) Purpose. – Royalty payments received for the use of intangible property in this State

are income derived from doing business in this State. This section provides taxpayers with an

option concerning the method by which these royalties can be reported for taxation when the

recipient and the payer are related members. As provided in this section, these royalty payments

can be either (i) deducted by the payer and included in the income of the recipient, or (ii) added

back to the income of the payer and excluded from the income of the recipient.


(1) Component member. – Defined in section 1563(b) of the Code.

(1a) Intangible property. – Copyrights, patents, and trademarks.

(2) North Carolina royalty. – An amount charged that is for, related to, or in

connection with the use in this State of intangible property. The term includes

royalty and technical fees, licensing fees, and other similar charges.

(3) Own. – To own directly, indirectly, beneficially, or constructively. The

attribution rules of section 318 of the Code apply in determining ownership

under this section.

(4) Related entity. – Any of the following:

a. A stockholder who is an individual, or a member of the stockholder's

family enumerated in section 318 of the Code, if the stockholder and

the members of the stockholder's family own in the aggregate at least

eighty percent (80%) of the value of the taxpayer's outstanding stock.

b. A stockholder, or a stockholder's partnership, limited liability

company, estate, trust, or corporation, if the stockholder and the

stockholder's partnerships, limited liability companies, estates, trusts,

and corporations own in the aggregate at least fifty percent (50%) of

the value of the taxpayer's outstanding stock.

c. A corporation, or a party related to the corporation in a manner that

would require an attribution of stock from the corporation to the party

or from the party to the corporation under the attribution rules of

section 318 of the Code, if the taxpayer owns at least eighty percent

(80%) of the value of the corporation's outstanding stock.

(5) Related member. – A person that, with respect to the taxpayer during any part

of the taxable year, is one or more of the following:

a. A related entity.

b. A component member.

c. A person to or from whom there would be attribution of stock

ownership in accordance with section 1563(e) of the Code if the

phrase "5 percent or more" were replaced by "twenty percent (20%) or

more" each place it appears in that section.

(6) Royalty payment. – Either of the following:

a. Expenses, losses, and costs paid, accrued, or incurred for North

Carolina royalties, to the extent the amounts are allowed as deductions

or costs in determining taxable income before operating loss deduction

and special deductions for the taxable year under the Code.


b. Amounts directly or indirectly allowed as deductions under section

163 of the Code, to the extent the amounts are paid, accrued, or

incurred for a time price differential charged for the late payment of

any expenses, losses, or costs described in this subdivision.

(7) Trademark. – A trademark, trade name, service mark, or other similar type of

intangible asset.

(8) Use. – Use of intangible property includes direct or indirect maintenance,

management, ownership, sale, exchange, or disposition of the intangible

property.

(c) Election. – For the purpose of computing its State net income, a taxpayer must add

royalty payments made to, or in connection with transactions with, a related member during the

taxable year. This addition is not required for an amount of royalty payments that meets any of

the following conditions:

(1) The related member includes the amount as income on a return filed under

this Part for the same taxable year that the amount is deducted by the

taxpayer, and the related member does not elect to deduct the amount pursuant

to G.S. 105-130.5(b)(20).

(2) The taxpayer can establish that the related member during the same taxable

year directly or indirectly paid, accrued, or incurred the amount to a person

who is not a related member.

(3) The taxpayer can establish that the related member to whom the amount was

paid is organized under the laws of a country other than the United States, the

country has a comprehensive income tax treaty with the United States, and the

country imposes a tax on the royalty income of the related member at a rate

that equals or exceeds the rate set in G.S. 105-130.3.

(d) Indirect Transactions. – For the purpose of this section, an indirect transaction or

relationship has the same effect as if it were direct. (2001-327, s. 1(b); 2003-416, s. 15; 2006-66,

s. 24A.3(a); 2006-196, s. 10.)

§ 105-130.7B. (Effective for taxable years beginning on or after January 1, 2016)

Limitation on qualified interest for certain indebtedness.

(a) Limitation. – In determining State net income, a deduction is allowed only for

qualified interest expense paid or accrued by the taxpayer to a related member during a taxable

year. This section does not limit the Secretary's authority to adjust a taxpayer's net income as it

relates to payments to or charges by a parent, subsidiary, or affiliated corporation in excess of

fair compensation in an intercompany transaction under G.S. 105-130.5(a)(9).

(b) Definitions. – The definitions in G.S. 105-130.7A apply in this section. In addition,

the following definitions apply in this section:

(1) Adjusted taxable income. – State net income of the taxpayer determined

without regard to this section and other adjustments as the Secretary may by

rule provide.

(2) Bank. – One or more of the following, or a subsidiary or affiliate of one or

more of the following:

a. A bank holding company as defined in the federal Bank Holding

Company Act of 1956, as amended.


b. One or more of the following entities incorporated or chartered under

the laws of this State, another state, or the United States:

1. A bank. This term has the same meaning as defined in G.S.

53C-1-4.

2. A savings bank. This term has the same meaning as defined in

G.S. 54C-4.

3. A savings and loan association. This term has the same

meaning as defined in G.S. 54B-4.

4. A trust company. This term has the same meaning as defined in

G.S. 53C-1-4.

(3) Net interest expense. – The excess of the interest paid or accrued by the

taxpayer to a related member during the taxable year over the amount of

interest from a related member includible in the gross income of the taxpayer

for the taxable year.

(4) Qualified interest expense. – The amount of net interest expense paid or

accrued to a related member in a taxable year not to exceed thirty percent

(30%) of the taxpayer's adjusted taxable income. This limitation does not

apply to interest paid or accrued to a related member if one or more of the

following applies:

a. Tax is imposed by the State under this Article on the related member

with respect to the interest.

b. The related member pays a net income tax or gross receipts tax to

another state with respect to the interest income.

c. The related member is organized under the laws of a foreign country

that has a comprehensive income tax treaty with the United States, and

that country taxes the interest income at a rate equal to or greater than

G.S. 105-130.3.

d. The related member is a bank. (2015-241, s. 32.13(f).)


Net economic loss.

(a) Net economic losses sustained by a corporation in any or all of the 15 preceding

income years shall be allowed as a deduction to the corporation subject to the following

limitations:

(1) The purpose in allowing the deduction of a net economic loss of a prior year is

to grant some measure of relief to the corporation that has incurred economic

misfortune or is otherwise materially affected by strict adherence to the annual

accounting rule in the determination of net income. The deduction allowed in

this section does not authorize the carrying forward of any particular items or

category of loss except to the extent that the loss results in the impairment of

the net economic situation of the corporation so as to result in a net economic

loss as defined in this section.

(2) The net economic loss for any year means the amount by which allowable

deductions for the year other than prior year losses exceed income from all

sources in the year including any income not taxable under this Part.


(3) Any net economic loss of prior years brought forward and claimed as a

deduction in any income year may be deducted from net income of the year

only to the extent that the loss carried forward from the prior years exceeds

any income not taxable under this Part received in the same year in which the

deduction is claimed, except that in the case of a corporation required to

allocate and apportion to North Carolina its net income, only that

proportionate part of the net economic loss of a prior year shall be deductible

from total income allocable to this State as would be determined by the use of

the allocation and apportionment provisions of G.S. 105-130.4 for the year of

the loss.

(4) A net economic loss carried forward from any year shall first be applied to, or

offset by, any income taxable or nontaxable of the next succeeding year

before any portion of the loss may be carried forward to a succeeding year.

(5) For purposes of this section, any income item deductible in determining State

net income under the provisions of G.S. 105-130.5 and any nonapportionable

income not allocable to this State under the provisions of G.S. 105-130.4 shall

be considered as income not taxable under this Part. The amount of the

income item considered income not taxable under this Part is determined after

subtracting related expenses for which a deduction was allowed under this

Part.

(6) No loss shall either directly or indirectly be carried forward more than 15

years.

(b) A corporation claiming a deduction for a loss for the current year or carried forward

from a prior year must maintain and make available for inspection by the Secretary all records

necessary to determine and verify the amount of the deduction. The Secretary or the taxpayer

may redetermine an item originating in a taxable year that is closed under the statute of

limitations for the purpose of determining the amount of net economic loss that can be carried

forward to a taxable year that remains open under the statute of limitations. (1939, c. 158, s.

322; 1941, c. 50, s. 5; 1943, c. 400, s. 4; c. 668; 1945, c. 708, s. 4; c. 752, s. 3; 1947, c. 501, s. 4;

c. 894; 1949, c. 392, s. 3; 1951, c. 643, s. 4; c. 937, s. 4; 1953, c. 1031, s. 1; c. 1302, s. 4; 1955, c.

1100, s. 1; c. 1331, s. 1; cc. 1332, 1342; c. 1343, s. 1; 1957, c. 1340, ss. 4, 8; 1959, c. 1259, s. 4;

1961, c. 201, s. 1; c. 1148; 1963, c. 1169, s. 2; 1965, c. 1048; 1967, c. 1110, s. 3; 1998-98, s. 69;

1998-171, ss. 6, 8; 2002-136, s. 3; 2003-416, s. 5(i); 2014-3, s. 1.1(b).)

§ 105-130.8A. (Effective for taxable years beginning on or after January 1, 2015) Net loss

provisions.

(a) State Net Loss. – A taxpayer's State net loss for a taxable year is the amount by which

allowable deductions for the year, other than prior year losses, exceed gross income under the

Code for the year adjusted as provided in G.S. 105-130.5. In the case of a corporation that has

income from business activity within and without this State, the loss must be allocated and

apportioned to this State in the year of the loss in accordance with G.S. 105-130.4.

(b) Deduction. – A taxpayer may carry forward a State net loss the taxpayer incurred in a

prior taxable year and deduct it in the current taxable year, subject to the limitations in this

subsection:

(1) The loss was incurred in one of the preceding 15 taxable years.


(2) Any loss carried forward is applied to the next succeeding taxable year before

any portion of it is carried forward and applied to a subsequent taxable year.

(c) Mergers and Acquisitions. – The Secretary must apply the standards contained in

regulations adopted under sections 381 and 382 of the Code in determining the extent to which a

loss survives a merger or an acquisition.

(d) Administration. – A taxpayer claiming a deduction under this section must maintain

and make available for inspection by the Secretary all records necessary to determine and verify

the amount of the deduction. The Secretary or the taxpayer may redetermine a loss originating in

a taxable year that is closed under the statute of limitations for the purpose of determining the

amount of loss that can be carried forward to a taxable year that remains open under the statute

of limitations.

(e) (Expires for taxable years beginning on or after January 1, 2030) Net Economic Loss

Carryforward. – For taxable years beginning before January 1, 2015, a taxpayer is allowed a net

economic loss as calculated under G.S. 105-130.8. In determining and verifying the amount of a

net economic loss incurred or carried forward for taxable years beginning before January 1,

2015, the provisions of G.S. 105-130.8 apply. Any unused portion of a net economic loss carried

forward to taxable years beginning on or after January 1, 2015, is administered in accordance

with this section. This subsection expires for taxable years beginning on or after January 1, 2030.

(2014-3, s. 1.1(c).)

§ 105-130.9. Contributions.

Contributions shall be allowed as a deduction to the extent and in the manner provided as

follows:

(1) Charitable contributions as defined in section 170(c) of the Code, exclusive of

contributions allowed in subdivision (2) of this section, shall be allowed as a

deduction to the extent provided herein. The amount allowed as a deduction

hereunder shall be limited to an amount not in excess of five percent (5%) of

the corporation's net income as computed without the benefit of this

subdivision or subdivision (2) of this section. Provided, that a carryover of

contributions shall not be allowed and that contributions made to North

Carolina donees by corporations allocating a part of their total net income

outside this State shall not be allowed under this subdivision, but shall be

allowed under subdivision (3) of this section.

(2) Contributions by any corporation to the State of North Carolina, any of its

institutions, instrumentalities, or agencies, any county of this State, its

institutions, instrumentalities, or agencies, any municipality of this State, its

institutions, instrumentalities, or agencies, and contributions or gifts by any

corporation to educational institutions located within North Carolina, no part

of the net earnings of which inures to the benefit of any private stockholders

or dividend. For the purpose of this subdivision, the words "educational

institution" shall mean only an educational institution which normally

maintains a regular faculty and curriculum and normally has a regularly

organized body of students in attendance at the place where the educational

activities are carried on. The words "educational institution" shall be deemed

to include all of such institution's departments, schools and colleges, a group

of "educational institutions" and an organization (corporation, trust,


foundation, association or other entity) organized and operated exclusively to

receive, hold, invest and administer property and to make expenditures to or

for the sole benefit of an "educational institution" or group of "educational

institutions."

(3) Corporations allocating a part of their total net income outside North Carolina

under the provisions of G.S. 105-130.4 shall deduct from total income

allocable to North Carolina contributions made to North Carolina donees

qualified under subdivisions (1) and (2) of this section or made through North

Carolina offices or branches of other donees qualified under the

above-mentioned subdivisions of this section; provided, such deduction for

contributions made to North Carolina donees qualified under subdivision (1)

of this section shall be limited in amount to five percent (5%) of the total

income allocated to North Carolina as computed without the benefit of this

deduction for contributions.

(4) (Effective for taxable years beginning before January 1, 2013) The amount

of a contribution for which the taxpayer claimed a tax credit pursuant to G.S.

105-130.34 or G.S. 105-130.48 shall not be eligible for a deduction under this

section. The amount of the credit claimed with respect to the contribution is

not, however, required to be added to income under G.S. 105-130.5(a)(10).


amount of a contribution for which the taxpayer claimed a tax credit pursuant

to G.S. 105-130.34 shall not be eligible for a deduction under this section. The

amount of the credit claimed with respect to the contribution is not, however,

required to be added to income under G.S. 105-130.5(a)(10). (1939, c. 158, s.

322; 1941, c. 50, s. 5; 1943, c. 400, s. 4; c. 668; 1945, c. 708, s. 4; c. 752, s. 3;

1947, c. 501, s. 4; c. 894; 1949, c. 392, s. 3; 1951, c. 643, s. 4; c. 937, s. 4;

1953, c. 1031, s. 1; c. 1302, s. 4; 1955, c. 1100, s. 1; c. 1331, s. 1; cc. 1332,

1342; c. 1343, s. 1; 1957, c. 1340, ss. 4, 8; 1959, c. 1259, s. 4; 1961, c. 201, s.

1; c. 1148; 1963, c. 1169, s. 2; 1965, c. 1048; 1967, c. 1110, s. 3; 1969, c.

1175, s. 1; 1973, c. 1287, s. 4; 1983, c. 713, s. 82; c. 793, s. 2; 1995, c. 370, s.

4; 2006-66, s. 24.18(b); 2011-330, s. 36.)


Amortization of air-cleaning devices, waste treatment facilities and recycling

facilities.

In lieu of any depreciation allowance, at the option of the corporation, a deduction shall be

allowed for the amortization, based on a period of 60 months, of the cost of:

(1) Any air-cleaning device, sewage or waste treatment plant, including waste

lagoons, and pollution abatement equipment purchased or constructed and

installed which reduces the amount of air or water pollution resulting from the

emission of air contaminants or the discharge of sewage, industrial waste, or

other polluting materials or substances into the outdoor atmosphere or

streams, lakes, rivers, or coastal waters. The deduction provided herein shall

apply also to the facilities or equipment of private or public utilities built and

installed primarily for the purpose of providing sewer service to residential

and outlying areas. The deduction provided for in this subdivision shall be


allowed by the Secretary of Revenue only upon the condition that the

corporation claiming such allowance shall furnish to the Secretary a certificate

from the Department of Environmental Quality or from a local air pollution

control program for air-cleaning devices located in an area where the

Environmental Management Commission has certified a local air pollution

control program pursuant to G.S. 143-215.112 certifying that the


program has found as a fact that the air-cleaning device, waste treatment plant

or other pollution abatement equipment purchased or constructed and installed

as above described has actually been constructed and installed and that such

construction, plant or equipment complies with the requirements of the


program with respect to such devices, construction, plants or equipment, that

such device, plant or equipment is being effectively operated in accordance

with the terms and conditions set forth in the permit, certificate of approval, or

other document of approval issued by the Environmental Management

Commission or local air pollution control program, and that the primary

purpose thereof is to reduce air or water pollution resulting from the emission

of air contaminants or the discharge of sewage and waste and not merely

incidental to other purposes and functions.

(2) Purchasing and installing equipment or constructing facilities for the purpose

of recycling or resource recovering of or from solid waste, or for the purpose

of reducing the volume of hazardous waste generated. The deduction provided

for in this subdivision shall be allowed by the Secretary of Revenue only upon

the condition that the corporation claiming such allowance shall furnish to the

Secretary a certificate from the Department of Environmental Quality

certifying that the Department of Environmental Quality has found as a fact

that the equipment or facility has actually been purchased, installed or

constructed, that it is in conformance with all rules and regulations of the

Department of Environmental Quality, and that recycling or resource

recovering is the primary purpose of the facility or equipment. (1939, c. 158,

s. 322; 1941, c. 50, s. 5; 1943, c. 400, s. 4; c. 668; 1945, c. 708, s. 4; c. 752, s.

3; 1947, c. 501, s. 4; c. 894; 1949, c. 392, s. 3; 1951, c. 643, s. 4; c. 937, s. 4;

1953, c. 1031, s. 1; c. 1302, s. 4; 1955, c. 1100, s. 1; c. 1331, s. 1; cc. 1332,

1342; c. 1343, s. 1; 1957, c. 1340, ss. 4, 8; 1959, c. 1259, s. 4; 1961, c. 201, s.

1; c. 1148; 1963, c. 1169, s. 2; 1965, c. 1048; 1967, c. 1110, s. 3; 1969, c. 817;

1973, c. 476, s. 193; c. 1262, s. 23; 1975, c. 764, s. 3; 1977, c. 771, s. 4; 1981,

c. 704, s. 19; 1987, c. 804, s. 4; 1989, c. 148, s. 2; c. 727, ss. 218(40), 219(28);

1997-443, s. 11A.119(a); 2015-241, ss. 14.30(u), 32.13(c).)

§ 105-130.10A. Amortization of equipment mandated by OSHA.

(a) In lieu of any depreciation allowance, at the option of the corporation, a deduction

shall be allowed for the amortization, based on a period of 60 months, of the cost of any

equipment mandated by the Occupational Safety and Health Act (OSHA), including the cost of

planning, acquiring, constructing, modifying, and installing said equipment.


(b) For the purposes of this section and G.S. 105-147(13)d, the term "equipment

mandated by the Occupational Safety and Health Act" is any tangible personal property and

other buildings and structural components of buildings, which is acquired, constructed,

reconstructed, modified, or erected after January 1, 1979; and which the taxpayer must acquire,

construct, install, or make available in order to comply with the occupational safety and health

standards adopted and promulgated by the United States Secretary of Labor or the Commissioner

of Labor of North Carolina, and the term "occupational safety and health standards" includes but

is not limited to interim federal standards, consensus standards, any proprietary standards or

permanent standards, as well as temporary emergency standards which may be adopted by the

United States Secretary of Labor, promulgated as provided by the Occupational Safety and

Health Act of 1970, (Public Law 91-596, 91st Congress, Act of December 29, 1970, 84 Stat.

1950) and which standards or regulations are published in the Code of Federal Regulations or

otherwise properly promulgated under the Occupational Safety and Health Act of 1970 or any

alternative rule, regulation or standard promulgated by the Commissioner of Labor of North

Carolina as provided in G.S. 95-131. (1979, c. 776, s. 1.)

§ 105-130.11. Conditional and other exemptions.

(a) Exempt Organizations. – Except as provided in subsections (b) and (c), the following

organizations and any organization that is exempt from federal income tax under the Code are

exempt from the tax imposed under this Part.

(1) Fraternal beneficiary societies, orders or associations

a. Operating under the lodge system or for the exclusive benefit of the

members of a fraternity itself operating under the lodge system, and

b. Providing for the payment of life, sick, accident, or other benefits to

the members of such society, order or association, or their dependents.

(2) Cooperative banks without capital stock organized and operated for mutual

purposes and without profit; and electric and telephone membership

corporations organized under Chapter 117 of the General Statutes.

(3) Cemetery corporations and corporations organized for religious, charitable,

scientific, literary, or educational purposes, or for the prevention of cruelty to

children or animals, no part of the net earnings of which inures to the benefit

of any private stockholder or individual.

(4) Business leagues, chambers of commerce, merchants' associations, or boards

of trade not organized for profit, and no part of the net earnings of which

inures to the benefit of any private stockholder or individual.

(5) Civic leagues or organizations not organized for profit, but operated

exclusively for the promotion of social welfare.

(6) Clubs organized and operated exclusively for pleasure, recreation, and other

nonprofitable purposes, no part of the net earnings of which inures to the

benefit of any private stockholder or member.

(7) Farmers' or other mutual hail, cyclone, or fire insurance companies, mutual

ditch or irrigation companies, mutual or cooperative telephone companies, or

like organizations of a purely local character the income of which consists

solely of assessments, dues, and fees collected from members for the sole

purpose of meeting expenses.


(8) Farmers', fruit growers', or like organizations organized and operated as sales

agents for the purpose of marketing the products of members and turning back

to them the proceeds of sales, less the necessary selling expenses, on the basis

of the quantity of product furnished by them.

(9) Mutual associations formed under G.S. 54-111 through 54-128 to conduct

agricultural business on the mutual plan and marketing associations organized

under G.S. 54-129 through 54-158.

Nothing in this subdivision shall be construed to exempt any cooperative,

mutual association, or other organization from an income tax on net income

that has not been refunded to patrons on a patronage basis and distributed

either in cash, stock, or certificates, or in some other manner that discloses the

amount of each patron's refund. Provided, in arriving at net income for

purposes of this subdivision, no deduction shall be allowed for dividends paid

on capital stock. Patronage refunds made after the close of the taxable year

and on or before the fifteenth day of the ninth month following the close of

the taxable year are considered as to be made on the last day of the taxable

year to the extent the allocations are attributable to income derived before the

close of the year; provided, that no stabilization or marketing organization that

handles agricultural products for sale for producers on a pool basis is

considered to have realized any net income or profit in the disposition of a

pool or any part of a pool until all of the products in that pool have been sold

and the pool has been closed; provided, further, that a pool is not considered

closed until the expiration of at least 90 days after the sale of the last

remaining product in that pool. These cooperatives and other organizations

shall file an annual information return with the Secretary on forms to be

furnished by the Secretary and shall include the names and addresses of all

persons, patrons, or shareholders whose patronage refunds amount to ten

dollars ($10.00) or more.

(10) Insurance companies paying the tax on gross premiums as specified in G.S.

105-228.5.

(11) Corporations or organizations, such as condominium associations, homeowner

associations, or cooperative housing corporations not organized for profit, the

membership of which is limited to the owners or occupants of residential units

in the condominium, housing development, or cooperative housing

corporation, and operated exclusively for the management, operation,

preservation, maintenance, or landscaping of the common areas and facilities

owned by the corporation or organization or its members situated contiguous

to the houses, apartments, or other dwellings or for the management,

operation, preservation, maintenance, and repair of the houses, apartments, or

other dwellings owned by the corporation or organization or its members, but

only if no part of the net earnings of the corporation or organization inures

(other than through the performance of related services for the members of

such corporation or organization) to the benefit of any member of such

corporation or organization or other person.

(b) Unrelated Business Income. – Except as provided in this subsection, an organization

described in subdivision (a)(1), (3), (4), (5), (6), (7), (8), or (9) of this section and any


organization exempt from federal income tax under the Code is subject to the tax provided in

G.S. 105-130.3 on its unrelated business taxable income, as defined in section 512 of the Code,

adjusted as provided in G.S. 105-130.5. The tax does not apply, however, to net income derived

from any of the following:

(1) Research performed by a college, university, or hospital.

(2) Research performed for the United States or its instrumentality or for a state

or its political subdivision.

(3) Research performed by an organization operated primarily to carry on

fundamental research, the results of which are freely available to the general

public.

(c) Homeowner Association Income. – An organization described in subdivision (a)(11)

of this section is subject to the tax provided in G.S. 105-130.3 on its gross income other than

membership income less the deductions allowed by this Article that are directly connected with

the production of the gross income other than membership income. The term "membership

income" means the gross income from assessments, fees, charges, or similar amounts received

from members of the organization for expenditure in the preservation, maintenance, and

management of the common areas and facilities of or the residential units in the condominium or

housing development.

(d) Real Estate Mortgage Investment Conduits. – An entity that qualifies as a real estate

mortgage investment conduit, as defined in section 860D of the Code, is exempt from the tax

imposed under this Part, except that any net income derived from a prohibited transaction, as

defined in section 860F of the Code, is taxable to the real estate mortgage investment conduit

under G.S. 105-130.3 and G.S. 105-130.3A, subject to the adjustments provided in G.S.

105-130.5. This subsection does not exempt the holders of a regular or residual interest in a real

estate mortgage investment conduit as defined in section 860G of the Code from any tax on the

income from that interest. (1939, c. 158, s. 314; 1945, c. 708, s. 4; c. 752, s. 3; 1949, c. 392, s. 3;

1951, c. 937, s. 1; 1955, c. 1313, s. 1; 1957, c. 1340, s. 4; 1959, c. 1259, s. 4; 1963, c. 1169, s. 2;

1967, c. 1110, s. 3; 1973, c. 476, s. 193; c. 1053, s. 4; 1975, c. 19, s. 28; c. 591, s. 2; 1981, c. 450,

s. 2; 1983, c. 28, s. 1; c. 31; 1985 (Reg. Sess., 1986), c. 826, s. 5; 1991 (Reg. Sess., 1992), c. 921,

s. 1; 1993, c. 494, s. 2; 1998-98, ss. 1(b), 69.)

§ 105-130.12. Real estate investment trusts.


(1) Captive REIT. – A REIT whose shares or certificates of beneficial interest are

not regularly traded on an established securities market and are owned or

controlled, at any time during the last half of the tax year, by a person that is

subject to tax under this Part and is not a REIT or a listed Australian property

trust.

(2) Own or control. – To own or control directly, indirectly, beneficially, or

constructively more than fifty percent (50%) of the voting power or value of

an entity. The attribution rules of section 318 of the Code, as modified by

section 856(d)(5) of the Code, apply in determining ownership and control.

(3) REIT. – A trust or another entity that qualifies as a real estate investment trust

under section 856 of the Code.

(b) Tax. – The income of a REIT is taxable under this Part in accordance with the Code,

unless the REIT is a captive REIT. A captive REIT is required to add to its federal taxable


income the amount of a dividend paid deduction allowed under the Code, as provided in G.S.

105-130.5. (1963, c. 1169, s. 2; 1967, c. 110, s. 3; 1971, c. 820, s. 2; 1973, c. 476, s. 193; 1983,

c. 713, s. 74; 1998-98, s. 69; 2007-323, s. 31.18(c).)

§ 105-130.13: Repealed by Session Laws 1987 (Regular Session, 1988), c. 1089, s. 2; as

amended by Session Laws 1989, c. 728, s. 1.33.

§ 105-130.14. Corporations filing consolidated returns for federal income tax purposes.

Any corporation electing or required to file a consolidated income tax return with the Internal

Revenue Service must determine its State net income as if the corporation had filed a separate

federal return and shall not file a consolidated or combined return with the Secretary unless one

of the following applies:

(1) The corporation is specifically directed in writing by the Secretary under G.S.

105-130.5A to file a consolidated or combined return.

(2) Repealed by Session Laws 2012-79, s. 1.14(c), effective June 26, 2012.

(3) Pursuant to a written request from the corporation under G.S. 105-130.5A, the

Secretary has provided written advice to the corporation stating that the

Secretary will allow a consolidated or combined return under the facts and

circumstances set out in the request and the corporation files a consolidated or

combined return in accordance with that written advice. (1967, c. 1110, s. 3;

1973, c. 476, s. 193; 2010-31, s. 31.10(e); 2012-79, s. 1.14(c).)

§ 105-130.15. Basis of return of net income.

(a) (Effective for taxable years beginning before January 1, 2012) The net income of

a corporation shall be computed in accordance with the method of accounting it regularly

employs in keeping its books. The method must be consistent with respect to both income and

deductions. If this method does not clearly reflect the income, the computation shall be made in

accordance with a method that, in the Secretary's opinion, does clearly reflect the income, but

shall follow as nearly as practicable the federal practice, unless contrary to the context and intent

of this Part.

The Secretary may adopt the rules and regulations and any guidelines administered or

established by the Internal Revenue Service unless contrary to any provisions of this Part.

(a) (Effective for taxable years beginning on or after January 1, 2012) The net

income of a corporation shall be computed in accordance with the method of accounting it

regularly employs in keeping its books. The method must be consistent with respect to both

income and deductions and shall follow as nearly as practicable the federal practice, unless

contrary to the context and intent of this Part.

The Secretary may adopt the rules and regulations and any guidelines administered or

established by the Internal Revenue Service unless contrary to any provisions of this Part.

(b) Change of Income Year. –

(1) A corporation may change the income year upon which it reports for income

tax purposes without prior approval by the Secretary of Revenue if such

change in income year has been approved by or is acceptable to the Federal

Commissioner of Internal Revenue and is used for filing income tax returns

under the provisions of the Code.


If a corporation desires to make a change in its income year other than as

provided above, it may make such change in its income year with the approval

of the Secretary of Revenue, provided such approval is requested at least 30

days prior to the end of its new income year.

A corporation which has changed its income year without requesting the

approval of the Secretary of Revenue as provided in the first paragraph of this

subdivision shall submit to the Secretary of Revenue notification of any

change in the income year after the change has been approved by the Federal

Commissioner of Internal Revenue or his agent where application for

permission to change is required by the Federal Commissioner of Internal

Revenue with such notification stating that such approval has been received.

Where application for change of the income year is not required by the

Federal Commissioner of Internal Revenue, notification of the change of

income year shall be submitted to the Secretary of Revenue with the short

period return.

(2) A return for a period of less than 12 months (referred to in this subsection as

"short period") shall be made when the corporation changes its income year.

In such a case, the return shall be made for the short period beginning on the

day after the close of the former taxable year and ending at the close of the

day before the day designated as the first day of the new taxable year, except

that a corporation changing to, or from, a taxable year varying from 52 to 53

weeks shall not be required to file a short period return if such change results

in a short period of 359 days or more, or less than seven days. Short period

income tax returns shall be filed within the same period following the end of

such short period as is required for full year returns under the provisions of

G.S. 105-130.17.

(c) Any foreign corporation not domesticated in this State shall not use the installment

method of reporting income to this State unless such corporation files a bond with the Secretary

of Revenue in such amount and with such sureties as the Secretary shall deem necessary to

secure the payment of any taxes which were deferred with respect to any installment transaction.

(d) Notwithstanding any other provision of this Part, any corporation which uses the

installment method of reporting income to this State and which is planning to withdraw from this

State, merge, or consolidate its business, or terminate its business in this State by any other

means whatsoever, shall be required to make a report for income tax purposes, to the Secretary

of Revenue, of any unrealized or unreported income from installment sales made while doing

business in this State and to pay any tax which may be due on such income. The manner and

form for making such report and paying the tax shall be as prescribed by the Secretary. (1939, c.

158, s. 318; 1943, c. 400, s. 4; 1945, c. 708, s. 4; 1949, c. 392, s. 3; 1955, c. 1313, s. 1; 1957, c.

1340, s. 4; 1963, c. 1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1983, c. 713, s. 82;

1998-98, s. 69; 2000-140, s. 64(a); 2011-390, s. 3; 2011-411, s. 8(b).)

§ 105-130.16. (Effective for taxable years beginning before January 1, 2012) Returns.

(a) Return. – Every corporation doing business in this State must file with the Secretary

an income tax return showing specifically the items of gross income and the deductions allowed

by this Part and any other facts the Secretary requires to make any computation required by this

Part. The return of a corporation must be signed by its president, vice-president, treasurer, or


chief financial officer. The officer signing the return must furnish an affirmation verifying the

return. The affirmation must be in the form required by the Secretary.

(b) Correction of Distortions. – When the Secretary has reason to believe that any

corporation so conducts its trade or business in such manner as to either directly or indirectly

distort its true net income and the net income properly attributable to the State, whether by the

arbitrary shifting of income, through price fixing, charges for service, or otherwise, whereby the

net income is arbitrarily assigned to one or another unit in a group of taxpayers carrying on

business under a substantially common control, the Secretary may require any facts the Secretary

considers necessary for the proper computation of the entire net income and the net income

properly attributable to the State, and in determining these computations, the Secretary must

have regard to the fair profit that would normally arise from the conduct of the trade or business.

(c) Other Corrections. – When any corporation liable to taxation under this Part conducts

its business in such a manner as to either directly or indirectly benefit the members or

stockholders thereof or any person interested in the business by selling its products or goods or

commodities in which it deals at less than the fair price which might be obtained therefor, or

when a corporation, a substantial portion of whose capital stock is owned either directly or

indirectly by another corporation, acquires and disposes of the products of the corporation so

owning a substantial portion of its stock in such a manner as to create a loss or improper net

income for either of the corporations, or when a corporation, owning directly or indirectly a

substantial portion of the stock of another corporation, acquires and disposes of the products of

the corporation of which it so owns a substantial portion of the stock in such manner as to create

a loss or improper net income for either of the corporations, the Secretary may determine the

amount of taxable income of the such corporations for the calendar or fiscal year, having due

regard to the reasonable profits which, but for such arrangement or understanding, might or

could have been obtained by the corporations liable to taxation under this Part from dealing in

such products, goods or commodities. (1939, c. 158, s. 326; 1941, c. 50, s. 5; 1943, c. 400, s. 4;

1945, c. 708, s. 4; 1951, c. 643, s. 4; 1957, c. 1340, s. 4; 1967, c. 1110, s. 3; 1973, c. 476, s. 193;

1998-98, s. 69; 1999-337, s. 22; 2008-134, s. 4(a); 2009-445, s. 6.)

§ 105-130.16. (Effective for taxable years beginning on or after January 1, 2012) Returns.

(a) Every corporation doing business in this State must file with the Secretary an income

tax return showing specifically the items of gross income and the deductions allowed by this Part

and any other facts the Secretary requires to make any computation required by this Part. The

return of a corporation must be signed by its president, vice-president, treasurer, or chief

financial officer. The officer signing the return must furnish an affirmation verifying the return.

The affirmation must be in the form required by the Secretary.

(b), (c) Repealed by Session Laws 2011-390, s. 4, as amended by Session Laws

2011-411, s. 8(b), effective for taxable years beginning on or after January 1, 2012. (1939, c.

158, s. 326; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 708, s. 4; 1951, c. 643, s. 4; 1957, c.

1340, s. 4; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1998-98, s. 69; 1999-337, s. 22; 2008-134, s.

4(a); 2009-445, s. 6; 2011-390, s. 4; 2011-411, s. 8(b).)

§ 105-130.17. Time and place of filing returns.

(a) Returns must be filed as prescribed by the Secretary at the place prescribed by the

Secretary. Returns must be in the form prescribed by the Secretary. The Secretary must furnish

forms in accordance with G.S. 105-254.


(b) Except as otherwise provided in this section, the return of a corporation shall be filed

on or before the fifteenth day of the fourth month following the close of its income year. An

income year ending on any day other than the last day of the month shall be deemed to end on

the last day of the calendar month ending nearest to the last day of a taxpayer's actual income

year.

(c) In the case of mutual associations formed under G.S. 54-111 through 54-128 to

conduct agricultural business on the mutual plan and marketing associations organized under

G.S. 54-129 through 54-158, which are required to file under subsection (a)(9) of G.S.

105-130.11, a return made on the basis of a calendar year shall be filed on or before the fifteenth

day of the September following the close of the calendar year, and a return made on the basis of

a fiscal year shall be filed on or before the fifteenth day of the ninth month following the close of

the fiscal year.

(d) A taxpayer may ask the Secretary for an extension of time to file a return under G.S.

105-263.

(d1) Organizations described in G.S. 105-130.11(a)(1), (3), (4), (5), (6), (7) and (8) that

are required to file a return under G.S. 105-130.11(b) shall file a return made on the basis of a

calendar year on or before the fifteenth day of May following the close of the calendar year and a

return made on the basis of a fiscal year on or before the fifteenth day of the fifth month

following the close of the fiscal year.

(e) Any corporation that ceases its operations in this State before the end of its income

year because of its intention to dissolve or to withdraw from this State, or because of a merger,

conversion, or consolidation or for any other reason whatsoever shall file its return for the then

current income year within 105 days after the date it terminates its business in this State.

(f) Repealed by Session Laws 1998-217, s. 42, effective October 31, 1998.

(g) A corporation that files a federal return pursuant to section 6072(c) of the Code shall

file its return on or before the fifteenth day of the seventh month following the close of its

income year. (1939, c. 158, s. 329; 1943, c. 400, s. 4; 1951, c. 643, s. 4; 1953, c. 1302, s. 4;

1955, c. 17, s. 1; 1957, c. 1340, s. 4; 1963, c. 1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193;

c. 1287, s. 4; 1981, c. 56; 1989 (Reg. Sess., 1990), c. 984, s. 8; 1997-300, s. 3; 1998-217, s. 42;

1999-369, s. 5.5; 2000-140, s. 64(b); 2006-18, s. 7; 2007-491, s. 14.)

§ 105-130.18: Repealed by Session Laws 2009-445, s. 7, effective August 7, 2009.

§ 105-130.19. When tax must be paid.

(a) Except as provided in Article 4C of this Chapter, the full amount of the tax payable as

shown on the return must be paid to the Secretary within the time allowed for filing the return.

(b), (c) Repealed by Session Laws 1989, c. 37, s. 1.


(1939, c. 158, s. 332; 1943, c. 400, s. 4; 1947, c. 501, s. 4; 1951, c. 643, s. 4; 1955, c. 17, s. 2;

1959, c. 1259, s. 2; 1963, c. 1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1977, c. 1114, s.

7; 1989, c. 37, s. 1; 1989 (Reg. Sess., 1990), c. 984, s. 9; 1991 (Reg. Sess., 1992), c. 930, s. 14;

1993, c. 450, s. 3.)

§ 105-130.20. Federal corrections.

If a taxpayer's federal taxable income is corrected or otherwise determined by the federal

government, the taxpayer must, within six months after being notified of the correction or final


determination by the federal government, file an income tax return with the Secretary reflecting

the corrected or determined taxable income. The Secretary must propose an assessment for any

additional tax due from the taxpayer as provided in Article 9 of this Chapter. The Secretary must

refund any overpayment of tax as provided in Article 9 of this Chapter. A taxpayer that fails to

comply with this section is subject to the penalties in G.S. 105-236 and forfeits its rights to any

refund due by reason of the determination. (1939, c. 158, s. 334; 1947, c. 501, s. 4; 1949, c. 392,

s. 3; 1957, c. 1340, s. 14; 1963, c. 1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1993 (Reg.

Sess., 1994), c. 582, s. 2; 2006-18, s. 4; 2007-491, s. 15.)

§ 105-130.21. Information at the source.

(a) Every corporation having a place of business or having one or more employees, agents or

other representatives in this State, in whatever capacity acting, including lessors or mortgagors of

real or personal property, or having the control, receipt, custody, disposal, or payment of interest

(other than interest coupons payable to the bearer), rent, salaries, wages, premiums, annuities,

compensations, remunerations, emoluments or other fixed or determinable annual or periodical

gains or profits paid or payable during any year to any taxpayer, shall make complete return

thereof to the Secretary of Revenue under such regulations and in such form and manner and to

such extent as may be prescribed by him. The filing of any report in compliance with the

provisions of this section by a foreign corporation shall not constitute an act in evidence of and

shall not be deemed to be evidence that such corporation is doing business in this State.

(b) Every corporation doing business or having a place of business in this State shall file

with the Secretary of Revenue, on such form and in such manner as he may prescribe, the names

and addresses of all taxpayers, residents of North Carolina, to whom dividends have been paid

and the amount of such dividends during the income year. (1939, c. 158, s. 328; 1945, c. 708, s.

4; 1957, c. 1340, s. 4; 1967, c. 1110, s. 3; 1973, c. 476, s. 193.)


Tax credit for construction of dwelling units for handicapped persons.

There is allowed to corporate owners of multifamily rental units located in this State as a

credit against the tax imposed by this Part, an amount equal to five hundred fifty dollars

($550.00) for each dwelling unit constructed by the corporate owner that conforms to Volume

I-C of the North Carolina Building Code for the taxable year within which the construction of the

dwelling unit is completed. The credit is allowed only for dwelling units completed during the

taxable year that were required to be built in compliance with Volume I-C of the North Carolina

Building Code. If the credit allowed by this section exceeds the tax imposed by this Part reduced

by all other credits allowed, the excess may be carried forward for the next succeeding year. In

order to secure the credit allowed by this section the corporation shall file with its income tax

return a copy of the occupancy permit on the face of which is recorded by the building inspector

the number of units completed during the taxable year that conform to Volume I-C of the North

Carolina Building Code. After recording the number of these units on the face of the occupancy

permit, the building inspector shall promptly forward a copy of the permit to the Building

Accessibility Section of the Department of Insurance. (1973, c. 910, s.1; 1979, c. 803, ss.1, 2;

1981, c. 682, s. 16; 1997-6, s. 3; 1998-98, s.69; 2013-316, s. 2.1(b).)

§ 105-130.23. Repealed by Session Laws 1999-342, s. 1, effective for taxable years beginning



§ 105-130.24. Repealed by Session Laws 1983 (Regular Session, 1984), c. 1004, s. 2.

§ 105-130.25. Credit against corporate income tax for construction of cogenerating power

plants.

(a) Credit. – A corporation or a partnership, other than a public utility as defined in G.S.

62-3(23), that constructs a cogenerating power plant in North Carolina is allowed as a credit

against the tax imposed by this Part an amount equal to ten percent (10%) of the costs paid

during the taxable year to purchase and install the electrical or mechanical power generation

equipment of that plant. The credit may not be taken for the year in which the costs are paid but

shall be taken for the taxable year beginning during the calendar year following the calendar year

in which the costs were paid. To be eligible for the credit allowed by this section, the corporation

or partnership must own or control the power plant at the time of construction. The credit

allowed by this section may not exceed the amount of tax imposed by this Part for the year

reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the

taxpayer.

(b) Cogenerating Power Plant Defined. – For purposes of this section, a cogenerating

power plant is a power plant that sequentially produces electrical or mechanical power and useful

thermal energy using natural gas as its primary energy source.

(c) Alternative Method. – A taxpayer eligible for the credit allowed by this section may

elect to treat the costs paid during an earlier year as if they were paid during the year the plant

becomes operational. This election must be made on or before April 15 following the calendar

year in which the plant becomes operational. The election must be in the form prescribed by the

Secretary and must contain any supporting documentation the Secretary may require. An election

with respect to costs paid by a partnership must be made by the partnership and is binding on any

partners to whom the credit is passed through.

The costs with respect to which this election is made will be treated, for the purposes of this

section, as if they had actually been paid in the year the plant becomes operational. If a taxpayer

makes this election, however, the credit may not exceed one-fourth the amount of tax imposed

by this Part for the year reduced by the sum of all credits allowed, except payments of tax by or

on behalf of the taxpayer, but any unused portion of the credit may be carried forward for the

next 10 taxable years. An election made under this subsection is irrevocable.

(d) Application. – To be eligible for the credit allowed in this section, a taxpayer must

file an application for the credit with the Secretary on or before April 15 following the calendar

year in which the costs were paid. The application shall be in the form prescribed by the

Secretary and shall include any supporting documentation the Secretary may require. An

application with respect to costs paid by a partnership must be made by the partnership on behalf

of its partners.

(e) Ceiling. – The total amount of all tax credits allowed to taxpayers under this section

for payments for construction and installation made in a calendar year may not exceed five

million dollars ($5,000,000). The Secretary shall calculate the total amount of tax credits claimed

from the applications filed pursuant to subsection (d). If the total amount of tax credits claimed

for payments made in a calendar year exceeds five million dollars ($5,000,000), the Secretary

shall allow a portion of the credits claimed by allocating the total allowable amount among all

taxpayers claiming the credits in proportion to the size of the credit claimed by each taxpayer. In


no case may the total amount of all tax credits allowed under this section for costs paid in a

calendar year exceed five million dollars ($5,000,000).

If a credit claimed under this section is reduced as provided in this subsection, the Secretary

shall notify the taxpayer of the amount of the reduction of the credit on or before December 31 of

the year the taxpayer applied for the credit. The amount of the reduction of the credit may be

carried forward and claimed for the next 10 taxable years if the taxpayer reapplies for a credit for

the amount of the reduction, as provided in subsection (d). In such a reapplication, the costs for

which a credit is claimed shall be considered as if they had been paid in the year preceding the

reapplication. The Secretary's allocations based on applications filed pursuant to subsection (d)

are final and shall not be adjusted to account for credits applied for but not claimed. (1979, c.

801, s. 34; 1993 (Reg. Sess., 1994), c. 674, ss. 1, 2, 4; 1995, c. 17, s. 2; 1998-98, s. 69.)

§ 105-130.26. Repealed by Session Laws 1999-342, s. 1, effective for taxable years beginning


§ 105-130.27 Expired.

§ 105-130.27A. Repealed by Session Laws 1999-342, s. 1, effective for taxable years beginning


§ 105-130.28: Repealed by Session Laws 2000-128, s. 3, effective for costs incurred during

taxable years beginning on or after January 1, 2006.

§§ 105-130.29 through 105-130.33. Repealed by Session Laws 1999-342, s. 1.


Credit for certain real property donations.

(a) Any C Corporation that makes a qualified donation of an interest in real property

located in North Carolina during the taxable year that is useful for (i) public beach access or use,

(ii) public access to public waters or trails, (iii) fish and wildlife conservation, (iv) forestland or

farmland conservation, (v) watershed protection, (vi) conservation of natural areas as that term is

defined in G.S. 113A-164.3(3), (vii) conservation of natural or scenic river areas as those terms

are used in G.S. 113A-34, (viii) conservation of predominantly natural parkland, or (ix) historic

landscape conservation is allowed a credit against the tax imposed by this Part equal to

twenty-five percent (25%) of the fair market value of the donated property interest. To be

eligible for this credit, the interest in real property must be donated in perpetuity for one of the

qualifying uses listed in this subsection and accepted in perpetuity for the qualifying use for

which the property is donated. The person to whom the property is donated must be the State, a

local government, or a body that is both organized to receive and administer lands for

conservation purposes and qualified to receive charitable contributions pursuant to G.S.

105-130.9. Lands required to be dedicated pursuant to local governmental regulation or

ordinance and dedications made to increase building density levels permitted under a regulation

or ordinance are not eligible for this credit.

The credit allowed under this section for one or more qualified donations made in a taxable

year may not exceed five hundred thousand dollars ($500,000). To support the credit allowed by


this section, the taxpayer must file with the income tax return for the taxable year in which the

credit is claimed the following:

(1) A certification by the Department of Environment and Natural Resources that

the property donated is suitable for one or more of the valid public benefits set

forth in this subsection.

(2) A self-contained appraisal report or summary appraisal report as defined in

Standards Rule 2-2 in the latest edition of the Uniform Standards of

Professional Appraisal Practice as promulgated by the Appraisal Foundation

for the property. For fee simple absolute donations of real property, a taxpayer

may submit documentation of the county's appraised value of the donated

property, as adjusted by the sales assessment ratio, in lieu of an appraisal

report.

(b) The credit allowed by this section may not exceed the amount of tax imposed by this

Part for the taxable year reduced by the sum of all credits allowed, except payments of tax made

by or on behalf of the taxpayer.

(c) Any unused portion of this credit may be carried forward for the next succeeding five

years.

(d) That portion of a qualifying donation that is the basis for a credit allowed under this

section is not eligible for deduction as a charitable contribution under G.S. 105-130.9. (1983, c.

793, s. 1; 1989, c. 716, s. 1; c. 727, s. 218 (41); 1997-226, s. 1; 1997-443, s. 11A.119(a);

1998-98, s. 69; 1998-212, s. 29A.13(c); 2002-72, s. 15(a); 2007-309, s. 1; 2009-445, s. 9(c);

2010-167, s. 5(a); 2013-316, s. 2.1(b).)

§ 105-130.35: Recodified as § 105-269.5 by Session Laws 1991, c. 45, s. 20.


Credit for conservation tillage equipment.

(a) Any corporation that purchases conservation tillage equipment for use in a farming

business, including tree farming, shall be allowed a credit against the tax imposed by this Part

equal to twenty-five percent (25%) of the cost of the equipment paid during the taxable year.

This credit may not exceed two thousand five hundred dollars ($2,500) for any taxable year for

any taxpayer. The credit may be claimed only by the first purchaser of the equipment and may

not be claimed by a corporation that purchases the equipment for resale or for use outside this

State. This credit may not exceed the amount of tax imposed by this Part for the taxable year

reduced by the sum of all credits allowable, except tax payments made by or on behalf of the

taxpayer. If the credit allowed by this section exceeds the tax imposed under this Part, the excess

may be carried forward for the succeeding five years. The basis in any equipment for which a

credit is allowed under this section shall be reduced by the amount of credit allowable.

(b) As used in this section, "conservation tillage equipment" means:

(1) A planter such as a planter commonly known as a "no-till" planter designed to

minimize disturbance of the soil in planting crops or trees, including

equipment that may be attached to equipment already owned by the taxpayer;

or,

(2) Equipment designed to minimize disturbance of the soil in reforestation site

preparation, including equipment that may be attached to equipment already

owned by the taxpayer; provided, however, this shall include only those items


of equipment generally known as a "KG-Blade", a "drum-chopper", or a

"V-Blade". (1983 (Reg. Sess., 1984), c. 969, s. 1; 1998-98, s. 88; 2013-316, s.

2.1(b).)


Credit for gleaned crop.

(a) Any corporation that grows a crop and permits the gleaning of the crop during the

taxable year is allowed a credit against the tax imposed by this Part equal to ten percent (10%) of

the market price of the quantity of the gleaned crop. This credit may not exceed the amount of

tax imposed by this Part for the taxable year reduced by the sum of all credits allowable, except

tax payments made by or on behalf of the taxpayer. No deduction is allowed under G.S.

105-130.5(b)(5) for the items for which a credit is claimed under this section. Any unused

portion of the credit may be carried forward for the succeeding five years.

(b) The following definitions apply to this section:

(1) "Gleaning" means the harvesting of a crop that has been donated by the

grower to the nonprofit organization which will distribute the crop to

individuals or other nonprofit organizations it considers appropriate recipients

of the food;

(2) "Market price" means the season average price of the crop as determined by

the North Carolina Crop and Livestock Reporting Service in the Department

of Agriculture and Consumer Services, or the average price of the crop in the

nearest local market for the month in which the crop is gleaned if the Crop

and Livestock Reporting Service does not determine the season average price

for that crop; and

(3) "Nonprofit organization" means an organization to which charitable

contributions are deductible from gross income under the Code. (1983 (Reg.

Sess., 1984), c. 1018, s. 1; 1993 (Reg. Sess., 1994), c. 745, s. 6; 1997-261, s.

12; 1998-98, s. 89; 2013-316, s. 2.1(b).)



Credit for certain telephone subscriber line charges.

(a) A corporation that provides local telephone service to low-income residential

consumers at reduced rates pursuant to an order of the North Carolina Utilities Commission is

allowed a credit against the tax imposed by this Part equal to the difference between the

following:

(1) The amount of receipts the corporation would have received during the

taxable year from those low-income customers had the customers been

charged the regular rates for local telephone service and fees.

(2) The amount billed those low-income customers for local telephone service

during the taxable year.

(b) This credit is allowed only for a reduction in local telephone service rates and fees

and is not allowed for any reduction in interstate subscriber line charges. This credit may not

exceed the amount of tax imposed by this Part for the taxable year reduced by the sum of all


credits allowable, except tax payments made by or on behalf of the corporation. (1985, c. 694, s.

2; 1998-98, s. 90; 2013-316, s. 2.1(b).)

§ 105-130.40: Recodified as § 105-129.8 by Session Laws 1996, 2nd Extra Session, c. 13, s.

3.2.


Credit for North Carolina State Ports Authority wharfage, handling, and

throughput charges.

(a) Credit. – A taxpayer whose waterborne cargo is loaded onto or unloaded from an

ocean carrier calling at the State-owned port terminal at Wilmington or Morehead City, without

consideration of the terms under which the cargo is moved, is allowed a credit against the tax

imposed by this Part. The amount of credit allowed is equal to the excess of the wharfage,

handling (in or out), and throughput charges assessed on the cargo for the current taxable year

over an amount equal to the average of the charges for the current taxable year and the two

preceding taxable years. The credit applies to forest products, break-bulk cargo and container

cargo, including less-than-container-load cargo, that is loaded onto or unloaded from an ocean

carrier calling at either the Wilmington or Morehead City port terminal and to bulk cargo that is

loaded onto or unloaded from an ocean carrier calling at the Morehead City port terminal. To

obtain the credit, taxpayers must provide to the Secretary a statement from the State Ports

Authority certifying the amount of charges for which a credit is claimed and any other

information required by the Secretary.

(b) Limitations. – This credit may not exceed fifty percent (50%) of the amount of tax

imposed by this Part for the taxable year reduced by the sum of all credits allowable, except tax

payments made by or on behalf of the corporation. Any unused portion of the credit may be

carried forward for the succeeding five years. The maximum cumulative credit that may be

claimed by a corporation under this section is two million dollars ($2,000,000).

(c) Definitions. – For purposes of this section, the terms "handling" (in or out) and

"wharfage" have the meanings provided in the State Ports Tariff Publications, "Wilmington

Tariff, Terminal Tariff #6," and "Morehead City Tariff, Terminal Tariff #1." For purposes of this

section, the term "throughput" has the same meaning as "wharfage" but applies only to bulk

products, both dry and liquid.

(c1) Report. – The Department must include in the economic incentives report required by


(1) The number of taxpayers taking a credit allowed in this section.

(2) The total amount of charges assessed for the taxable year.

(2a) The amount of the charges attributable to imports.

(2b) The amount of the charges attributable to exports.


(d) Sunset. – This section is repealed effective for taxable years beginning on or after

January 1, 2014. (1991 (Reg. Sess., 1992), c. 977, s. 1; 1993 (Reg. Sess., 1994), c. 681, s. 1;

1995, c. 17, s. 17; c. 495, ss. 1, 3, 4; 1996, 2nd Ex. Sess., c. 18, s. 15.3(a); 1997-443, s.

29.1(a)-(c); 1998-98, s. 69; 2001-517, ss. 1, 2; 2002-99, s. 6(c); 2003-414, s. 7; 2005-429, s. 2.9;

2007-527, s. 26(a); 2008-107, s. 28.5(a), (b); 2010-166, s. 1.11.)


§ 105-130.42: Recodified as §§ 105-129.35 through 105-129.37 by Session Laws 1999-389,

ss. 2-4, effective for taxable years beginning on or after January 1, 1999.


Credit for savings and loan supervisory fees.

Every savings and loan association is allowed a credit against the tax imposed by this Part for

a taxable year equal to the amount of supervisory fees, paid by the association during the taxable

year, that were assessed by the Commissioner of Banks of the Department of Commerce for the

State fiscal year beginning during that taxable year. This credit may not exceed the amount of tax

imposed by this Part for the taxable year, reduced by the sum of all credits allowed against the

tax, except tax payments made by or on behalf of the taxpayer. A taxpayer that claims the credit

allowed under this section may not deduct the supervisory fees in determining taxable income.

(1985, c. 750, s. 1; 1989, c. 76, s. 24; c. 751, s. 7(8); 1991 (Reg. Sess., 1992), c. 959, s. 22;

1998-98, s. 1(d), (e); 2001-193, s. 16; 2013-316, s. 2.1(b).)


Credit for construction of poultry composting facility.

A taxpayer who constructs in this State a poultry composting facility, as defined in G.S.

106-549.51 for the composting of whole, unprocessed poultry carcasses from commercial

operations in which poultry is raised or produced, is allowed as a credit against the tax imposed

by this Part an amount equal to twenty-five percent (25%) of the installation, materials, and

equipment costs of construction paid during the taxable year. This credit may not exceed one

thousand dollars ($1,000) for any single installation. The credit allowed by this section may not

exceed the amount of tax imposed by this Part the taxable year reduced by the sum of all credits

allowable, except payments of tax by or on behalf of the taxpayer. The credit allowed by this

section does not apply to costs paid with funds provided the taxpayer by a State or federal

agency. (1998-134, s. 1; 1998-98, s. 69; 2013-316, s. 2.1(b).)

§ 105-130.45. (Repealed effective January 1, 2018) Credit for manufacturing cigarettes for

exportation.


(1) Base year exportation volume. – The number of cigarettes manufactured and

exported by a corporation during the calendar year 2003.

(2) Exportation. – The shipment of cigarettes manufactured in the United States to

any of the following sufficient to relieve the cigarettes in the shipment of the

federal excise tax on cigarettes:

a. A foreign country.

b. A possession of the United States.

c. A commonwealth of the United States that is not a state.

(3) Successor in business. – A corporation that through amalgamation, merger,

acquisition, consolidation, or other legal succession becomes invested with the

rights and assumes the burdens of the predecessor corporation and continues

the cigarette exportation business.

(b) Credit. – A corporation engaged in the business of manufacturing cigarettes for

exportation to a foreign country and that waterborne exports cigarettes and other tobacco

products through the North Carolina State Ports during the taxable year is allowed a credit


against the taxes levied by this Part. The amount of credit allowed under this section is

determined by comparing the exportation volume of the corporation in the year for which the

credit is claimed with the corporation's base year exportation volume, rounded to the nearest

whole percentage. In the case of a successor in business, the amount of credit allowed under this

section is determined by comparing the exportation volume of the corporation in the year for

which the credit is claimed with all of the corporation's predecessor corporations' combined base

year exportation volume, rounded to the nearest whole percentage. The amount of credit allowed

may not exceed six million dollars ($6,000,000) and is computed as follows:

Current Year's Exportation Amount of Credit

Volume Compared to its per Thousand

Base Year's Exportation Volume Cigarettes Exported

120% or more 40¢

119% – 100% 35¢

99% – 80% 30¢

79% – 60% 25¢

59% – 50% 20¢

Less than 50% None

(c) Cap. – The credit allowed under this section may not exceed the lesser of six million

dollars ($6,000,000) or fifty percent (50%) of the amount of tax imposed by this Part for the

taxable year reduced by the sum of all other credits allowable, except tax payments made by or

on behalf of the taxpayer. This limitation applies to the cumulative amount of the credit allowed

in any tax year, including carryforwards claimed by the taxpayer under this section for previous

tax years. Any unused portion of a credit allowed in this section may be carried forward for the

next succeeding ten years.

(d) Documentation of Credit. – A corporation that claims the credit under this section

must include the following with its tax return:

(1) A statement of the base year exportation volume.

(2) A statement of the exportation volume on which the credit is based.

(3) A list of the corporation's export volumes shown on its monthly reports to the

Alcohol and Tobacco Tax and Trade Bureau of the United States Treasury for

the months in the tax year for which the credit is claimed.

(e) No Double Credit. – A taxpayer may not claim this credit and the credit allowed

under G.S. 105-130.46 for the same activity.

(f) Report. – The Department must include in the economic incentives report required by



(2) The total amount of exports with respect to which credits were taken.

(3) The total cost to the General Fund of the credits taken. (1999-333, s. 4;

2003-435, 2nd Ex. Sess., ss. 5.1, 5.2, 5.3; 2005-429, s. 2.10; 2010-166, s.

1.12.)

§ 105-130.46. (See notes for expiration date) Credit for manufacturing cigarettes for

exportation while increasing employment and utilizing State Ports.


(a) Purpose. – The credit authorized by this section is intended to enhance the economy

of this State by encouraging qualifying cigarette manufacturers to increase employment in this

State with the purpose of expanding this State's economy, the use of the North Carolina State

Ports, and the use of other State goods and services, including tobacco.


(1) Employment level. – The total number of full-time jobs and part-time jobs

converted into full-time equivalences. A job is included in the employment

level for a year only if that job is located within the State for more than six

months of the year. A job is located in this State if more than fifty percent

(50%) of the employee's duties are performed in this State.

(2) Exportation. – The shipment of cigarettes manufactured in the United States to

a foreign country sufficient to relieve the cigarettes in the shipment of the

federal excise tax on cigarettes.

(3) Full-time job. – A position that requires at least 1,600 hours of work per year

and is intended to be held by one employee during the entire year.

(4) Successor in business. – A corporation that through amalgamation, merger,

acquisition, consolidation, or other legal succession becomes invested with the

rights and assumes the burdens of the predecessor corporation and continues

the cigarette exportation business.

(c) Employment Level. – In order to be eligible for a full credit allowed under this

section, the corporation must maintain an employment level in this State for the taxable year that

exceeds the corporation's employment level in this State at the end of the 2004 calendar year by

at least 800 full-time jobs. In the case of a successor in business, the corporation must maintain

an employment level in this State for the taxable year that exceeds all its predecessor

corporations' combined employment levels in this State at the end of the 2004 calendar year by at

least 800 full-time jobs.

(d) Credit. – A corporation that satisfies the employment level requirement under

subsection (c) of this section, is engaged in the business of manufacturing cigarettes for

exportation, and exports cigarettes and other tobacco products through the North Carolina State

Ports during the taxable year is allowed a credit as provided in this section. The amount of credit

allowed under this section is equal to forty cents (40¢) per one thousand cigarettes exported. The

amount of credit earned during the taxable year may not exceed ten million dollars

($10,000,000).

(e) Reduction of Credit. – A corporation that has previously satisfied the qualification

requirements of this section but that fails to satisfy the employment level requirement in a

succeeding year may still claim a partial credit for the year in which the employment level

requirement is not satisfied. The partial credit allowed is equal to the credit that would otherwise

be allowed under subsection (d) of this section multiplied by a fraction. The numerator of the

fraction is the number of full-time jobs by which the corporation's employment level in this State

for the taxable year exceeds the corporation's employment level in this State at the end of the

2004 calendar year. The denominator of the fraction is 800. In the case of a successor in

business, the numerator of the fraction is the number of full-time jobs by which the corporation's

employment level in this State for the taxable year exceeds all its predecessor corporations'

combined employment levels in this State at the end of the 2004 calendar year.

(f) Allocation. – The credit allowed by this section may be taken against the income

taxes levied under this Part or the franchise taxes levied under Article 3 of this Chapter. When


the taxpayer claims a credit under this section, the taxpayer must elect the percentage of the

credit to be applied against the taxes levied under this Part with any remaining percentage to be

applied against the taxes levied under Article 3 of this Chapter. This election is binding for the

year in which it is made and for any carryforwards. A taxpayer may elect a different allocation

for each year in which the taxpayer qualifies for a credit.

(g) Ceiling. – The total amount of credit that may be taken in a taxable year under this

section may not exceed the lesser of the amount of credit which may be earned for that year

under subsection (d) of this section or fifty percent (50%) of the amount of tax against which the

credit is taken for the taxable year reduced by the sum of all other credits allowable, except tax

payments made by or on behalf of the taxpayer. This limitation applies to the cumulative amount

of the credit allowed in any tax year, including carryforwards claimed by the taxpayer under this

section or G.S. 105-130.45 for previous tax years.

(h) Carryforward. – Any unused portion of a credit allowed in this section may be carried

forward for the next succeeding 10 years. All carryforwards of a credit must be taken against the

tax against which the credit was originally claimed. A successor in business may take the

carryforwards of a predecessor corporation as if they were carryforwards of a credit allowed to

the successor in business.

(i) Documentation of Credit. – A corporation that claims the credit under this section

must include the following with its tax return:

(1) A statement of the exportation volume on which the credit is based.

(2) A list of the corporation's export volumes shown on its monthly reports to the

Alcohol and Tobacco Tax and Trade Bureau of the United States Treasury for

the months in the tax year for which the credit is claimed.

(3) Any other information required by the Department of Revenue.

(j) No Double Credit. – A taxpayer may not claim this credit and the credit allowed

under G.S. 105-130.45 for the same activity.

(k) Report. – The Department must include in the economic incentives report required by


(1) The number of taxpayers that took the credit allowed in this section.

(2) The amount of cigarettes and other tobacco products exported through the

North Carolina State Ports with respect to which credits were taken.

(3) The percentage of domestic leaf content in cigarettes produced during the

previous year, as reported by the taxpayer.

(4) The total cost to the General Fund of the credits taken. (2003-435, 2nd Ex.

Sess., s. 6.1; 2004-170, s. 16(a); 2010-166, s. 1.13.)

§ 105-130.47. (Repealed for qualifying expenses occurring on or after January 1, 2015)

Credit for qualifying expenses of a production company.


(1) Highly compensated individual. – An individual who directly or indirectly

receives compensation in excess of one million dollars ($1,000,000) for

personal services with respect to a single production. An individual receives

compensation indirectly when a production company pays a personal service

company or an employee leasing company that pays the individual.

(2) Live sporting event. – A scheduled sporting competition, game, or race that is

not originated by a production company, but originated solely by an amateur,


collegiate, or professional organization, institution, or association for live or

tape-delayed television or satellite broadcast. A live sporting event does not

include commercial advertising, an episodic television series, a television

pilot, a music video, a motion picture, or a documentary production in which

sporting events are presented through archived historical footage or similar

footage taken at least 30 days before it is used.

(3) Production company. – Defined in G.S. 105-164.3.

(4) Qualifying expenses. – The sum of the following amounts spent in this State

by a production company in connection with a production, less the amount in

excess of one million dollars ($1,000,000) paid to a highly compensated

individual:

a. Goods and services leased or purchased. For goods with a purchase

price of twenty-five thousand dollars ($25,000) or more, the amount

included in qualifying expenses is the purchase price less the fair

market value of the good at the time the production is completed.

b. Compensation and wages on which withholding payments are remitted

to the Department of Revenue under Article 4A of this Chapter.

c. The cost of production-related insurance coverage obtained on the

production. Expenses for insurance coverage purchased from a related

member are not qualifying expenses.

d. Employee fringe contributions, including health, pension, and welfare

contributions.

e. Per diems, stipends, and living allowances paid for work being



(b) Credit. – A taxpayer that is a production company and has qualifying expenses of at

least two hundred fifty thousand dollars ($250,000) with respect to a production is allowed a

credit against the taxes imposed by this Part equal to twenty-five percent (25%) of the production

company's qualifying expenses. For the purposes of this section, in the case of an episodic

television series, an entire season of episodes is one production. The credit is computed based on

all of the taxpayer's qualifying expenses incurred with respect to the production, not just the

qualifying expenses incurred during the taxable year.

(b1) Repealed by Session Laws 2009-529, s. 1, effective January 1, 2011.

(c) Pass-Through Entity. – Notwithstanding the provisions of G.S. 105-131.8 and G.S.

105-269.15, a pass-through entity that qualifies for a credit provided in this section does not


for purposes of claiming a credit allowed by this section. If a return filed by a pass-through entity

indicates that the entity is paying tax on behalf of the owners of the entity, a credit allowed under

this section does not affect the entity's payment of tax on behalf of its owners.

(d) Return. – A taxpayer may claim a credit allowed by this section on a return filed for

the taxable year in which the production activities are completed. The return must state the name

of the production, a description of the production, and a detailed accounting of the qualifying

expenses with respect to which a credit is claimed. The qualifying expenses are subject to audit

by the Secretary before the credit is allowed.

(e) Credit Refundable. – If a credit allowed by this section exceeds the amount of tax

imposed by this Part for the taxable year reduced by the sum of all credits allowable, the


Secretary must refund the excess to the taxpayer. The refundable excess is governed by the

provisions governing a refund of an overpayment by the taxpayer of the tax imposed in this Part.

In computing the amount of tax against which multiple credits are allowed, nonrefundable credits

are subtracted before refundable credits.

(f) Limitations. – The amount of credit allowed under this section with respect to a

production that is a feature film may not exceed twenty million dollars ($20,000,000). No credit

is allowed under this section for any production that satisfies one of the following conditions:


(2) It is a television production of a news program or live sporting event.

(3) It contains material that is obscene, as defined in G.S. 14-190.1.

(4) It is a radio production.

(g) Substantiation. – A taxpayer allowed a credit under this section must maintain and

make available for inspection any information or records required by the Secretary of Revenue.

The taxpayer has the burden of proving eligibility for a credit and the amount of the credit. The

Secretary may consult with the North Carolina Film Office of the Department of Commerce and

the regional film commissions in order to determine the amount of qualifying expenses.

(h) Report. – The Department must include in the economic incentives report required by

G.S. 105-256 the following information, itemized by taxpayer:

(1) The location of sites used in a production for which a credit was taken.

(2) The qualifying expenses for which a credit was taken, classified by whether

the expenses were for goods, services, or compensation paid by the production

company.

(3) The number of people employed in the State with respect to credits taken.


(i) Repealed by Session Laws 2006-220, s. 2, effective for taxable years beginning on or


(j) NC Film Office. – To claim a credit under this section, a taxpayer must notify the

Department of Commerce of the taxpayer's intent to claim the production tax credit. The

notification must include the title of the production, the name of the production company, a

financial contact for the production company, the proposed dates on which the production

company plans to begin filming the production, and any other information required by the

Department. For productions that have production credits, a taxpayer claiming a credit under this

section must acknowledge in the production credits both the North Carolina Film Office and the

regional film office responsible for the geographic area in which the filming of the production

occurred.

(k) Sunset. – This section is repealed for qualifying expenses occurring on or after

January 1, 2015. (2005-276, s. 39.1(a); 2005-345, ss. 47(a), 47(b); 2006-162, s. 4(a); 2006-220,

s. 2; 2007-527, s. 24; 2008-107, s. 28.24(a); 2009-445, s. 8(a); 2009-529, s. 1; 2010-147, s. 2.1;

2010-166, s. 1.14; 2012-194, s. 79.10(a); 2015-241, s. 15.4(g).)

§ 105-130.48. (Repealed for taxable years beginning on or after January 1, 2014) Credit for

recycling oyster shells.

(a) Credit. – A taxpayer who donates oyster shells to the Division of Marine Fisheries of

the Department of Environment and Natural Resources is eligible for a credit against the tax

imposed by this Part. The amount of the credit is equal to one dollar ($1.00) per bushel of oyster

shells donated.


(b) Limitation. – The credit allowed under this section may not exceed the amount of tax


payment made by or on behalf of the taxpayer.

(c) Carryforward. – Any unused portion of a credit allowed in this section may be carried

forward for the succeeding five years. A successor in business may take the carryforwards of a

predecessor corporation as if they were carryforwards of a credit allowed to the successor in

business.

(d) No Double Benefit. – No deduction is allowed under G.S. 105-130.5(b)(5) or G.S.

105-130.9 for the donation of oyster shells for which a credit is claimed under this section.

(e) Documentation of Credit. – Upon request, to support the credit allowed by this

section, the taxpayer must file with its income tax return, for the taxable year in which the credit

is claimed, a certification by the Department of Environment and Natural Resources stating the

number of bushels of oyster shells donated by the taxpayer.

(f) Sunset. – This section is repealed effective for taxable years beginning on or after

January 1, 2014. (2006-66, s. 24.18(a); 2007-527, s. 9(a); 2010-147, s. 4.1; 2011-330, s. 36;

2012-36, s. 6(a).)

Part 1A. S Corporation Income Tax.

§ 105-131. Title; definitions; interpretation.

(a) This Part of the income tax Article shall be known and may be cited as the S

Corporation Income Tax Act.

(b) For the purpose of this Part, unless otherwise required by the context:

(1) "Code" has the same meaning as in G.S. 105-228.90.

(2) "C Corporation" means a corporation that is not an S Corporation and is

subject to the tax levied under Part 1 of this Article.

(3) "Department" means the Department of Revenue.

(4) "Income attributable to the State" means items of income, loss, deduction, or

credit of the S Corporation apportioned and allocated to this State pursuant to

G.S. 105-130.4.

(5) "Income not attributable to the State" means all items of income, loss,

deduction, or credit of the S Corporation other than income attributable to the

State.

(6) "Post-termination transition period" means that period defined in section

1377(b)(1) of the Code.

(7) "Pro rata share" means the share determined with respect to an S Corporation

shareholder for a taxable period in the manner provided in section 1377(a) of

the Code.

(8) "S Corporation" means a corporation for which a valid election under section

1362(a) of the Code is in effect.

(9) "Secretary" means the Secretary of Revenue.

(10) "Taxable period" means any taxable year or portion of a taxable year during

which a corporation is an S Corporation.

(c) Except as otherwise expressly provided or clearly appearing from the context, any

term used in this Part shall have the same meaning as when used in a comparable context in the

Code, or in any statute relating to federal income taxes, in effect during the taxable period. Due

consideration shall be given in the interpretation of this Part to applicable sections of the Code in


effect and to federal rulings and regulations interpreting those sections, except where the Code,

ruling, or regulation conflicts with the provisions of this Part. (1987 (Reg. Sess., 1988), c. 1089,

s. 1; 1989, c. 728, ss. 1.33, 1.35; 1989 (Reg. Sess., 1990), c. 981, s. 4; 1991, c. 689, s. 251; 1991

(Reg. Sess., 1992), c. 922, s. 5; 1993, c. 12, s. 6; 1998-98, ss. 43, 68-70.)

§ 105-131.1. Taxation of an S Corporation and its shareholders.

(a) An S Corporation shall not be subject to the tax levied under G.S. 105-130.3.

(b) Each shareholder's pro rata share of an S Corporation's income attributable to the

State and each resident shareholder's pro rata share of income not attributable to the State, shall

be taken into account by the shareholder in the manner and subject to the adjustments provided

in Parts 2 and 3 of this Article and section 1366 of the Code and shall be subject to the tax levied

under Parts 2 and 3 of this Article. (1987 (Reg. Sess., 1988), c. 1089, s. 1; 1989, c. 728, ss. 1.33,

1.35; 1998-98, ss. 5, 68.)

§ 105-131.2. Adjustment and characterization of income.

(a) (Effective for taxable years beginning before January 1, 2014) Adjustment. –

Each shareholder's pro rata share of an S Corporation's income is subject to the adjustments

provided in G.S. 105-134.6.

(a) (Effective for taxable years beginning on or after January 1, 2014) Adjustment. –

Each shareholder's pro rata share of an S Corporation's income is subject to the adjustments

provided in G.S. 105-153.5 and G.S. 105-153.6.

(b) Repealed by Session Laws 1989, c. 728, s. 1.35.

(c) Characterization of Income. – S Corporation items of income, loss, deduction, and

credit taken into account by a shareholder pursuant to G.S. 105-131.1(b) are characterized as

though received or incurred by the S Corporation and not its shareholder. (1987 (Reg. Sess.,

1988), c. 1089, s. 1; 1989, c. 728, ss. 1.33, 1.35; 1993, c. 485, s. 8; 2006-17, s. 1; 2013-316, s.

1.3(a).)

§ 105-131.3. Basis and adjustments.

(a) The initial basis of a resident shareholder in the stock of an S Corporation and in any

indebtedness of the corporation owed to that shareholder shall be determined, as of the later of

the date the stock is acquired, the effective date of the S Corporation election, or the date the

shareholder became a resident of this State, as provided under the Code.

(b) The basis of a resident shareholder in the stock and indebtedness of an S Corporation

shall be adjusted in the manner and to the extent required by section 1011 of the Code except

that:

(1) Any adjustments made (other than for income exempt from federal or State

income taxes) pursuant to G.S. 105-131.2 shall be taken into account; and

(2) Any adjustments made pursuant to section 1367 of the Code for a taxable

period during which this State did not measure S Corporation shareholder

income by reference to the corporation's income shall be disregarded.

(c) The initial basis of a nonresident shareholder in the stock of an S Corporation and in

any indebtedness of the corporation to that shareholder shall be zero.

(d) The basis of a nonresident shareholder in the stock and indebtedness of an S

Corporation shall be adjusted as provided in section 1367 of the Code, except that adjustments to


basis shall be limited to the income taken into account by the shareholder pursuant to G.S.

105-131.1(b).

(e) The basis of a shareholder in the stock of an S Corporation shall be reduced by the

amount allowed as a loss or deduction pursuant to G.S. 105-131.4(c).

(f) The basis of a resident shareholder in the stock of an S Corporation shall be reduced

by the amount of any cash distribution that is not taxable to the shareholder as a result of the

application of G.S. 105-131.6(b).

(g) For purposes of this section, a shareholder shall be considered to have acquired stock

or indebtedness received by gift at the time the donor acquired the stock or indebtedness, if the

donor was a resident of this State at the time of the gift. (1987 (Reg. Sess., 1988), c. 1089, s. 1;

1989, c. 728, ss. 1.33, 1.35.)

§ 105-131.4. Carryforwards; carrybacks; loss limitation.

(a) Carryforwards and carrybacks to and from an S Corporation shall be restricted in the

manner provided in section 1371(b) of the Code.

(b) The aggregate amount of losses or deductions of an S Corporation taken into account

by a shareholder pursuant to G.S. 105-131.1(b) may not exceed the combined adjusted bases,

determined in accordance with G.S. 105-131.3, of the shareholder in the stock and indebtedness

of the S Corporation.

(c) Any loss or deduction that is disallowed for a taxable period pursuant to subsection

(b) of this section shall be treated as incurred by the corporation in the succeeding taxable period

with respect to that shareholder.

(d) (1) Any loss or deduction that is disallowed pursuant to subsection (b) of this

section for the corporation's last taxable period as an S Corporation shall be

treated as incurred by the shareholder on the last day of any post-termination

transition period.

(2) The aggregate amount of losses and deductions taken into account by a

shareholder pursuant to subdivision (1) of this subsection may not exceed the

adjusted basis of the shareholder in the stock of the corporation (determined in

accordance with G.S. 105-131.3 at the close of the last day of any

post-termination transition period and without regard to this subsection).

(e) Expired. (1987 (Reg. Sess., 1988), c. 1089, s. 1; 1989, c. 728, ss. 1.33, 1.35; 1989

(Reg. Sess., 1990), c. 984, s. 1; 1991, c. 752.)

§ 105-131.5. Part-year resident shareholder.

If a shareholder of an S Corporation is both a resident and nonresident of this State during

any taxable period, the shareholder's pro rata share of the S Corporation's income attributable to

the State and income not attributable to the State for the taxable period shall be further prorated

between the shareholder's periods of residence and nonresidence, in accordance with the number

of days in each period, as provided in G.S. 105-134.5. (1987 (Reg. Sess., 1988), c. 1089, s. 1;

1989, c. 728, ss. 1.33, 1.35.)

§ 105-131.6. Distributions.

(a) Subject to the provisions of subsection (c) of this section, a distribution made by an S

Corporation with respect to its stock to a resident shareholder is taxable to the shareholder as


provided in Parts 2 and 3 of this Article to the extent that the distribution is characterized as a

dividend or as gain from the sale or exchange of property pursuant to section 1368 of the Code.

(b) Subject to the provisions of subsection (c) of this section, any distribution of money

made by a corporation with respect to its stock to a resident shareholder during a

post-termination transition period is not taxable to the shareholder as provided in Parts 2 and 3 of

this Article to the extent the distribution is applied against and reduces the adjusted basis of the

stock of the shareholder in accordance with section 1371(e) of the Code.

(c) In applying sections 1368 and 1371(e) of the Code to any distribution referred to in

this section:

(1) The term "adjusted basis of the stock" means the adjusted basis of the

shareholder's stock as determined under G.S. 105-131.3.

(2) The accumulated adjustments account maintained for each resident

shareholder must be equal to, and adjusted in the same manner as, the

corporation's accumulated adjustments account defined in section

1368(e)(1)(A) of the Code, except that:

a. The accumulated adjustments account shall be modified in the manner

provided in G.S. 105-131.3(b)(1).

b. The amount of the corporation's federal accumulated adjustments

account that existed on the day this State began to measure the S

Corporation shareholders' income by reference to the income of the S

Corporation is ignored and is treated for purposes of this Article as

additional accumulated earnings and profits of the corporation. (1987

(Reg. Sess., 1988), c. 1089, s. 1; 1989, c. 728, ss. 1.33, 1.35; 1998-98,

s. 6.)

§ 105-131.7. Returns; shareholder agreements; mandatory withholding.

(a) An S Corporation incorporated or doing business in the State shall file with the

Department an annual return, on a form prescribed by the Secretary, on or before the due date

prescribed for the filing of C Corporation returns in G.S. 105-130.17. The return shall show the

name, address, and social security or federal identification number of each shareholder, income

attributable to the State and the income not attributable to the State with respect to each

shareholder as defined in G.S. 105-131(4) and (5), and such other information as the Secretary

may require.

(b) The Department shall permit S Corporations to file composite returns and to make

composite payments of tax on behalf of some or all nonresident shareholders. The Department

may permit S Corporations to file composite returns and make composite payments of tax on

behalf of some or all resident shareholders.

(c) (Effective for taxable years beginning before January 1, 2014) An S Corporation

shall file with the Department, on a form prescribed by the Secretary, the agreement of each

nonresident shareholder of the corporation (i) to file a return and make timely payment of all

taxes imposed by this State on the shareholder with respect to the income of the S Corporation,

and (ii) to be subject to personal jurisdiction in this State for purposes of the collection of any

unpaid income tax, together with related interest and penalties, owed by the nonresident

shareholder. If the corporation fails to timely file an agreement required by this subsection on

behalf of any of its nonresident shareholders, then the corporation shall at the time specified in

subsection (d) of this section pay to the Department on behalf of each nonresident shareholder


with respect to whom an agreement has not been timely filed an estimated amount of the tax due

the State. The estimated amount of tax due the State shall be computed at the rates levied in G.S.

105-134.2(a)(3) on the shareholder's pro rata share of the S Corporation's income attributable to

the State reflected on the corporation's return for the taxable period. An S Corporation may

recover a payment made pursuant to the preceding sentence from the shareholder on whose

behalf the payment was made.

(c) (Effective for taxable years beginning on or after January 1, 2014) An S

Corporation shall file with the Department, on a form prescribed by the Secretary, the agreement

of each nonresident shareholder of the corporation (i) to file a return and make timely payment of

all taxes imposed by this State on the shareholder with respect to the income of the S

Corporation, and (ii) to be subject to personal jurisdiction in this State for purposes of the

collection of any unpaid income tax, together with related interest and penalties, owed by the

nonresident shareholder. If the corporation fails to timely file an agreement required by this

subsection on behalf of any of its nonresident shareholders, then the corporation shall at the time

specified in subsection (d) of this section pay to the Department on behalf of each nonresident

shareholder with respect to whom an agreement has not been timely filed an estimated amount of

the tax due the State. The estimated amount of tax due the State shall be computed at the rate

levied in G.S. 105-153.7 on the shareholder's pro rata share of the S Corporation's income

attributable to the State reflected on the corporation's return for the taxable period. An S

Corporation may recover a payment made pursuant to the preceding sentence from the

shareholder on whose behalf the payment was made.

(d) The agreements required to be filed pursuant to subsection (c) of this section shall be

filed at the following times:

(1) At the time the annual return is required to be filed for the first taxable period

for which the S Corporation becomes subject to the provisions of this Part.

(2) At the time the annual return is required to be filed for any taxable period in

which the corporation has a nonresident shareholder on whose behalf such an

agreement has not been previously filed.

(e) Amounts paid to the Department on account of the corporation's shareholders under

subsections (b) and (c) constitute payments on their behalf of the income tax imposed on them

under Parts 2 and 3 of this Article for the taxable period. (1987 (Reg. Sess., 1988), c. 1089, s. 1;

1989, c. 728, ss. 1.33, 1.35; 1991, c. 689, s. 301; 1998-98, s. 7; 1999-337, s. 24; 2013-316, s.

1.3(b).)

§ 105-131.8. Tax credits.

(a) For purposes of G.S. 105-151 and G.S. 105-160.4, each resident shareholder is

considered to have paid a tax imposed on the shareholder in an amount equal to the shareholder's

pro rata share of any net income tax paid by the S Corporation to a state that does not measure

the income of S Corporation shareholders by the income of the S Corporation. For purposes of

the preceding sentence, the term "net income tax" means any tax imposed on or measured by a

corporation's net income.

(b) Except as otherwise provided in G.S. 105-160.3, each shareholder of an S

Corporation is allowed as a credit against the tax imposed by Parts 2 and 3 of this Article an

amount equal to the shareholder's pro rata share of the tax credits for which the S Corporation is

eligible. (1987 (Reg. Sess., 1988), c. 1089, s. 1; 1989, c. 728, ss. 1.33, 1.35; 1991, c. 45, s. 7;

1998-98, s. 8.)


§ 105-132: Recodified as § 105-135 by Session Laws 1967, c. 1110, s. 3.

Part 2. Individual Income Tax.

§ 105-133. (Recodified for taxable years beginning on or after January 1, 2014 – see

editor's note) Short title.

This Part of the income tax Article shall be known as the Individual Income Tax Act. (1967,

c. 1110, s. 3; 1989, c. 728, s. 1.1; 1998-98, ss. 44, 68.)


editor's note) Purpose.


the taxable income collectible annually:

(1) Of every resident of this State.

(2) Of every nonresident individual deriving income from North Carolina sources

attributable to the ownership of any interest in real or tangible personal

property in this State, deriving income from a business, trade, profession, or

occupation carried on in this State, or deriving income from gambling

activities in this State. (1939, c. 158, s. 301; 1967, c. 1110, s. 3; 1989, c. 728,

s. 1.2; 1998-98, s. 69; 2005-276, s. 31.1(dd), (jj); 2005-344, s. 10.3; 2006-259,

s. 8(j); 2006-264, s. 91(a).)

§ 105-134.1. (Recodified effective for taxable years beginning on or after January 1, 2014 –

see editor's note) Definitions.


(1) Adjusted gross income. – Defined in section 62 of the Code.



(3) Educational institution. – An educational institution that normally maintains a

regular faculty and curriculum and normally has a regularly organized body of

students in attendance at the place where its educational activities are carried

on.

(4) Fiscal year. – Defined in section 441(e) of the Code.


(6) Head of household. – Defined in section 2(b) of the Code.

(7) Individual. – A human being.

(7a) Limited liability company. – Either a domestic limited liability company

organized under Chapter 57C of the General Statutes or a foreign limited


that is classified for federal income tax purposes as a partnership. As applied

to a limited liability company that is a partnership under this Part, the term

"partner" means a member of the limited liability company.

(7b) Repealed by Session Laws 1998-98, s. 9, effective August 14, 1998.

(8) Married individual. – An individual who is married and is considered married

as provided in section 7703 of the Code.

(9) Nonresident individual. – An individual who is not a resident of this State.


(10) North Carolina taxable income. – Defined in G.S. 105-134.5.

(10a) Partnership. – A domestic partnership, a foreign partnership, or a limited

liability company.


(12) Resident. – An individual who is domiciled in this State at any time during the

taxable year or who resides in this State during the taxable year for other than

a temporary or transitory purpose. In the absence of convincing proof to the

contrary, an individual who is present within the State for more than 183 days

during the taxable year is presumed to be a resident, but the absence of an

individual from the state for more than 183 days raises no presumption that

the individual is not a resident. A resident who removes from the State during

a taxable year is considered a resident until he has both established a definite

domicile elsewhere and abandoned any domicile in this State. The fact of

marriage does not raise any presumption as to domicile or residence.

(13) Retirement benefits. – Amounts paid to a former employee or the beneficiary

of a former employee under a written retirement plan established by the

employer to provide payments to an employee or the beneficiary of an

employee after the end of the employee's employment with the employer

where the right to receive the payments is based upon the employment

relationship. With respect to a self-employed individual or the beneficiary of a

self-employed individual, the term means amounts paid to the individual or

beneficiary of the individual under a written retirement plan established by the

individual to provide payments to the individual or the beneficiary of the

individual after the end of the self-employment. In addition, the term includes

amounts received from an individual retirement account described in section

408 of the Code or from an individual retirement annuity described in section

408 of the Code. For the purpose of this subdivision, the term "employee"

includes a volunteer worker.



(15a) Surviving spouse. – Defined in section 2(a) of the Code.

(16) Repealed by Session Laws 2011-145, s. 31A.1(a), effective for taxable years


(17) Taxable year. – Defined in section 441(b) of the Code.

(18) Taxpayer. – An individual subject to the tax imposed by this Part.

(19) This State. – The State of North Carolina. (1989, c. 728, s. 1.4; c. 792, s. 1.2;

1989 (Reg. Sess., 1990), c. 814, s. 15; c. 981, s. 5; 1991, c. 689, s. 252; 1991

(Reg. Sess., 1992), c. 922, s. 6; 1993, c. 12, s. 7; c. 354, s. 13; 1996, 2nd Ex.

Sess., c. 13, s. 8.2; 1998-98, ss. 9, 69; 2011-145, s. 31A.1(a); 2011-330, s.

12(a); 2015-6, s. 2.20(c).)

§ 105-134.2. (Repealed effective for taxable years beginning on or after January 1, 2014 –

see note) Individual income tax imposed.

(a) A tax is imposed upon the North Carolina taxable income of every individual. The tax

shall be levied, collected, and paid annually and shall be computed at the following percentages

of the taxpayer's North Carolina taxable income.


(1) For married individuals who file a joint return under G.S. 105-152 and for

surviving spouses, as defined in section 2(a) of the Code:

Over Up To Rate -0- $21,250 6%

$21,250 $100,000 7%

$100,000 NA 7.75%

(2) For heads of households, as defined in section 2(b) of the Code:


$17,000 $80,000 7%

$80,000 NA 7.75%

(3) For unmarried individuals other than surviving spouses and heads of

households:


$12,750 $60,000 7%

$60,000 NA 7.75%

(4) For married individuals who do not file a joint return under G.S. 105-152:

Over Up To Rate

-0- $10,625 6%

$10,625 $50,000 7%

$50,000 NA 7.75%

(b) In lieu of the tax imposed by subsection (a) of this section, there is imposed for each

taxable year upon the North Carolina taxable income of every individual a tax determined under

tables, applicable to the taxable year, which may be prescribed by the Secretary. The amounts of

the tax determined under the tables shall be computed on the basis of the rates prescribed by

subsection (a) of this section. This subsection does not apply to an individual filing a return

under section 443(a)(1) of the Code for a period of less than 12 months on account of a change in

the individual's annual accounting period, or to an estate or trust. The tax imposed by this

subsection shall be treated as the tax imposed by subsection (a) of this section. (1989, c. 728, s.

1.4; 1989 (Reg. Sess., 1990), c. 814, s. 16; 1991, c. 45, s. 8; c. 689, s. 300; 1991 (Reg. Sess.,

1992), c. 930, s. 15; 2001-424, s. 34.18(a); 2003-284, s. 39.1(a); 2003-284, ss. 39.1, 39.2;

2005-276, s. 36.1(a); 2006-66, ss. 24.2(a)-(c); 2013-316, ss. 1.1(a), (b); 2013-414, s. 1(e).)

§ 105-134.2A: Expired pursuant to its own terms, effective for taxable years beginning on or



see note) Year of assessment.

The tax imposed by this Part shall be assessed, collected, and paid in the taxable year

following the taxable year for which the assessment is made, except as provided to the contrary

in Article 4A of this Chapter. (1989, c. 728, s. 1.4; 1998-98, s. 69; 2013-316, s. 1.1(b).)


Taxable year.


A taxpayer shall compute North Carolina taxable income on the basis of the taxable year

used in computing the taxpayer's income tax liability under the Code. (1989, c. 728, s. 1.4;

2011-145, s. 31A.1(d).)

§ 105-134.5. (Effective for taxable years beginning before January 1, 2012) North Carolina

taxable income defined.

(a) Residents. – For residents of this State, the term "North Carolina taxable income"

means the taxpayer's taxable income as determined under the Code, adjusted as provided in G.S.

105-134.6 and G.S. 105-134.7.

(b) Nonresidents. – For nonresident individuals, the term "North Carolina taxable

income" means the taxpayer's taxable income as determined under the Code, adjusted as

provided in G.S. 105-134.6 and G.S. 105-134.7, multiplied by a fraction the denominator of

which is the taxpayer's gross income as determined under the Code, adjusted as provided in G.S.

105-134.6 and G.S. 105-134.7, and the numerator of which is the amount of that gross income,

as adjusted, that is derived from North Carolina sources and is attributable to the ownership of

any interest in real or tangible personal property in this State, is derived from a business, trade,

profession, or occupation carried on in this State, or is derived from gambling activities in this

State.

(c) Part-year Residents. – If an individual was a resident of this State for only part of the

taxable year, having moved into or removed from the State during the year, the term "North

Carolina taxable income" has the same meaning as in subsection (b) except that the numerator

shall include gross income, adjusted as provided in G.S. 105-134.6 and G.S. 105-134.7, derived

from all sources during the period the individual was a resident.

(d) S Corporations and Partnerships. – In order to calculate the numerator of the fraction

provided in subsection (b), the amount of a shareholder's pro rata share of S Corporation income

that is includable in the numerator shall be the shareholder's pro rata share of the S Corporation's

income attributable to the State, as defined in G.S. 105-131(b)(4). In order to calculate the

numerator of the fraction provided in subsection (b) for a member of a partnership or other

unincorporated business with one or more nonresident members that operates in one or more

other states, the amount of the member's distributive share of income of the business that is

includable in the numerator shall be determined by multiplying the total net income of the

business by the ratio ascertained under the provisions of G.S. 105-130.4. As used in this

subsection, total net income means the entire gross income of the business less all expenses,

taxes, interest, and other deductions allowable under the Code which were incurred in the

operation of the business. (1989, c. 728, s. 1.4; 1995, c. 17, s. 4; 2005-276, s. 31.1(aa);

2005-344, s. 10.4.)

§ 105-134.5. (Effective for taxable years beginning on or after January 1, 2012 and

recodified effective for taxable years beginning on or after January 1, 2014)

North Carolina taxable income defined.

(a) Residents. – For an individual who is a resident of this State, the term "North

Carolina taxable income" means the taxpayer's adjusted gross income as modified in G.S.

105-134.6 and G.S. 105-134.6A.

(b) Nonresidents. – For a nonresident individual, the term "North Carolina taxable

income" means the taxpayer's adjusted gross income as modified in G.S. 105-134.6 and G.S.

105-134.6A multiplied by a fraction the denominator of which is the taxpayer's gross income as


modified in G.S. 105-134.6 and G.S. 105-134.6A, and the numerator of which is the amount of

that gross income, as modified, that is derived from North Carolina sources and is attributable to

the ownership of any interest in real or tangible personal property in this State, is derived from a

business, trade, profession, or occupation carried on in this State, or is derived from gambling

activities in this State.



Carolina taxable income" has the same meaning as in subsection (b) of this section except that

the numerator includes gross income, as modified under G.S. 105-134.6 and G.S. 105-134.6A,

derived from all sources during the period the individual was a resident.


provided in subsection (b) of this section, the amount of a shareholder's pro rata share of S

Corporation income that is includable in the numerator is the shareholder's pro rata share of the S

Corporation's income attributable to the State, as defined in G.S. 105-131(b)(4). In order to

calculate the numerator of the fraction provided in subsection (b) of this section for a member of

a partnership or other unincorporated business that has one or more nonresident members and

operates in one or more other states, the amount of the member's distributive share of income of

the business that is includable in the numerator is determined by multiplying the total net income

of the business by the ratio ascertained under the provisions of G.S. 105-130.4. As used in this


taxes, interest, and other deductions allowable under the Code that were incurred in the operation

of the business.

(e) Tax Year. – A taxpayer must compute North Carolina taxable income on the basis of

the taxable year used in computing the taxpayer's income tax liability under the Code. (1989, c.

728, s. 1.4; 1995, c. 17, s. 4; 2005-276, s. 31.1(aa); 2005-344, s. 10.4; 2011-145, s. 31A.1(b);

2012-79, s. 1.2; 2013-414, s. 55.)


see notes) Modifications to adjusted gross income.

(a) S Corporations. – Each shareholder's pro rata share of an S Corporation's income is

subject to the adjustments provided in this section.

(a1) Personal Exemption. – In calculating North Carolina taxable income, a taxpayer may

deduct an exemption amount equal to the amount listed in the table below based on the

taxpayer's filing status and adjusted gross income. The taxpayer is allowed the same personal

exemptions allowed under section 151 of the Code for the taxable year.

Personal

Filing Status Adjusted Gross Income Exemption

Married, filing jointly Up to $100,000 $2,500

Over $100,000 $2,000

Head of Household Up to $80,000 $2,500

Over $80,000 $2,000

Single Up to $60,000 $2,500

Over $60,000 $2,000

Married, filing separately Up to $50,000 $2,500

Over $50,000 $2,000


(a2) Deduction Amount. – In calculating North Carolina taxable income, a taxpayer may

deduct either the North Carolina standard deduction amount for that taxpayer's filing status or the

itemized deductions amount claimed under the Code. The North Carolina standard deduction

amount is the lesser of the amount shown in the table below or the amount allowed under the

Code. In the case of a married couple filing separate returns, a taxpayer may not deduct the

standard deduction amount if the taxpayer or the taxpayer's spouse claims itemized deductions

for State purposes.

A taxpayer that deducts the standard deduction amount under this subsection and is entitled

to an additional deduction amount under section 63(f) of the Code for the aged or blind may

deduct an additional amount under this subsection. The additional amount the taxpayer may

deduct is six hundred dollars ($600.00) in the case of an individual who is married and seven

hundred fifty dollars ($750.00) in the case of an individual who is not married and is not a

surviving spouse. The taxpayer is allowed the same number of additional amounts that the

taxpayer claimed under the Code for the taxable year.

Filing Status Standard Deduction Married, filing jointly/

surviving spouse $6,000

Head of Household 4,400

Single 3,000

Married, filing separately 3,000."

(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may

deduct any of the following items to the extent those items are included in the taxpayer's adjusted

gross income.

(1) Interest upon the obligations of any of the following:

a. The United States or its possessions.

b. This State, a political subdivision of this State, or a commission, an


of this State.

c. A nonprofit educational institution organized or chartered under the

laws of this State.

(2) Gain from the disposition of obligations issued before July 1, 1995, to the

extent the gain is exempt from tax under the laws of this State.

(3) Benefits received under Title II of the Social Security Act and amounts

received from retirement annuities or pensions paid under the provisions of

the Railroad Retirement Act of 1937.

(4) Repealed by Session Laws 1989 (Reg. Sess., 1990), c. 1002, s. 2.

(5) Refunds of state, local, and foreign income taxes included in the taxpayer's

gross income.

(5a) Reserved.

(5b) The amount received during the taxable year from one or more State, local, or

federal government retirement plans to the extent the amount is exempt from

tax under this Part pursuant to a court order in settlement of the following

cases: Bailey v. State, 92 CVS 10221, 94 CVS 6904, 95 CVS 6625, 95 CVS

8230; Emory v. State, 98 CVS 0738; and Patton v. State, 95 CVS 04346.

Amounts deducted under this subdivision may not also be deducted under



(6) a. An amount, not to exceed four thousand dollars ($4,000), equal to the

sum of the amount calculated in subparagraph b. plus the amount

calculated in subparagraph c.

b. The amount calculated in this subparagraph is the amount received

during the taxable year from one or more state, local, or federal

government retirement plans.

c. The amount calculated in this subparagraph is the amount received

during the taxable year from one or more retirement plans other than

state, local, or federal government retirement plans, not to exceed a

total of two thousand dollars ($2,000) in any taxable year.

d. In the case of a married couple filing a joint return where both spouses

received retirement benefits during the taxable year, the maximum

dollar amounts provided in this subdivision for various types of

retirement benefits apply separately to each spouse's benefits.

(7) Recodified as G.S. 105-134.6(d)(1).

(8) Recodified as G.S. 105-134.6(d)(2).

(9) Income that is (i) earned or received by an enrolled member of a federally

recognized Indian tribe and (ii) derived from activities on a federally

recognized Indian reservation while the member resides on the reservation.

Income from intangibles having a situs on the reservation and retirement

income associated with activities on the reservation are considered income

derived from activities on the reservation.

(10) The amount by which the basis of property under this Article exceeds the

basis of the property under the Code, in the year the taxpayer disposes of the

property.

(11) Severance wages received by a taxpayer from an employer as the result of the

taxpayer's permanent, involuntary termination from employment through no

fault of the employee. The amount of severance wages deducted as the result

of the same termination may not exceed thirty-five thousand dollars ($35,000)

for all taxable years in which the wages are received.

(12) Repealed by Session Laws 1998-171, s. 2, effective October 1, 1998.

(13) Repealed by Session Laws 2002-126, s. 30C.4, effective for taxable years


(14) The amount paid to the taxpayer by the State under G.S. 148-84 as

compensation for pecuniary loss suffered by reason of erroneous conviction

and imprisonment.

(15) Interest, investment earnings, and gains of a trust, the settlors of which are two

or more manufacturers that signed a settlement agreement with this State to

settle existing and potential claims of the State against the manufacturers for

damages attributable to a product of the manufacturers, if the trust meets all of


a. The purpose of the trust is to address adverse economic consequences

resulting from a decline in demand of the manufactured product

potentially expected to occur because of market restrictions and other

provisions in the settlement agreement.

b. A court of this State approves and retains jurisdiction over the trust.


c. Certain portions of the distributions from the trust are made in

accordance with certifications that meet the criteria in the agreement

creating the trust and are provided by a nonprofit entity, the governing

board of which includes State officials.

(16) The amount paid to the taxpayer during the taxable year from the Hurricane

Floyd Reserve Fund in the Office of State Budget and Management for

hurricane relief or assistance, but not including payments for goods or services

provided by the taxpayer.

(17) Repealed by Session Laws 2013-414, s. 34(c), effective August 23, 2013.

(17a), (17b) Repealed by Session Laws 2013-414, s. 34(c), effective August 23,

2013.

(18) The amount paid to the taxpayer during the taxable year from the Disaster

Relief Reserve Fund in the Office of State Budget and Management for

hurricane relief or assistance, but not including payments for goods or services

provided by the taxpayer.

(19) (Expires for taxable years beginning on or after January 1, 2015) Five

percent (5%) of the gross purchase price of a qualified sale of a manufactured

home community. A qualified sale is a transfer of land comprising a

manufactured home community in a single purchase to a group composed of a

majority of the manufactured home community leaseholders or to a nonprofit

organization that represents such a group. To be eligible for this deduction, a

taxpayer must give notice of the sale to the North Carolina Housing Finance

Agency under G.S. 42-14.3.

(20) The amount added to federal taxable income as deferred income under section

108(i)(1) of the Code. This deduction applies to taxable years beginning on or


(21), (21a) Repealed by Session Laws 2013-414, s. 34(c), effective August 23,

2013.

(22) An amount not to exceed fifty thousand dollars ($50,000) of net business

income the taxpayer receives during the taxable year. In the case of a married

couple filing a joint return where both spouses receive or incur net business

income, the maximum dollar amounts apply separately to each spouse's net

business income, not to exceed a total of one hundred thousand dollars

($100,000). For purposes of this subdivision, the term "business income" does

not include income that is considered passive income under the Code.

(23) The amount allowed as a deduction under G.S. 105-134.6A as a result of an


(24) Amounts that were recognized as income under State law but not under

federal law due to a taxpayer's use of a different installment method prior to

January 1, 1989, shall be deducted from taxable income in the taxpayer's first

taxable year beginning on or after January 1, 1989.

(c) Additions. – In calculating North Carolina taxable income, a taxpayer must add any

of the following items to the extent those items are not included in the taxpayer's adjusted gross

income. For a taxpayer who deducts the itemized deductions amount under subsection (a2) of

this section, the taxpayer must add any of the following items to the extent those items are

included in the itemized deductions amount.


(1) Interest upon the obligations of states other than this State, political

subdivisions of those states, and agencies of those states and their political

subdivisions.

(2) Any amount allowed as a deduction from gross income under the Code that is

taxed under the Code by a separate tax other than the tax imposed in section 1

of the Code.

(3) Any amount deducted from gross income under section 164 of the Code as

state, local, or foreign income tax, as state or local general sales tax, or as

qualified motor vehicle tax to the extent that the taxpayer's total itemized

deductions deducted under the Code for the taxable year exceed the standard

deduction allowable to the taxpayer under subsection (a2) of this section.

(3a) The amount by which a shareholder's share of S Corporation income is

reduced under section 1366(f)(2) of the Code for the taxable year by the

amount of built-in gains tax imposed on the S Corporation under section 1374

of the Code.

(4), (4a) Repealed by Session Laws 2011-145, s. 31A.1(c), effective for taxable

years beginning on or after January 1, 2012.

(5) The market price of the gleaned crop for which the taxpayer claims a credit

for the taxable year under G.S. 105-151.14.

(5a) (Expires for taxable years beginning on or after January 1, 2013) The market

price of the oyster shells for which the taxpayer claims a credit for the taxable

year under G.S. 105-151.30.

(5b) The amount of a donation made to a nonprofit organization or a unit of State

or local government for which a credit is claimed under G.S. 105-129.16H.

(6) The amount by which the basis of property under the Code exceeds the basis

of the property under this Article, in the year the taxpayer disposes of the

property.

(7) The amount of federal estate tax that is attributable to an item of income in

respect of a decedent and is deducted from gross income under section 691(c)

of the Code.

(8) Repealed by Session Laws 2013-414, s. 34(c), effective August 23, 2013.

(8a), (8b) Repealed by Session Laws 2013-414, s. 34(c), effective August 23, 2013.


beginning on and after January 1, 2007.


(11) Repealed by Session Laws 2011-145, s. 31A.1(c), effective for taxable years


(12) Repealed by Session Laws 2011-330, s. 12(e), effective for taxable years


(13) The amount of income deferred under section 108(i)(1) of the Code from the

discharge of indebtedness in connection with a reacquisition of an applicable

debt instrument.

(14) The amount allowed as a deduction under section 163(e)(5)(F) of the Code for

an original issue discount on an applicable high yield discount obligation.

(15) For taxable years 2010 and 2011, eighty-five percent (85%) of the amount by

which the taxpayer's expense deduction under section 179 of the Code for


property placed in service in taxable year 2010 or 2011 exceeds the amount

that would have been allowed for the respective taxable year under section

179 of the Code as of May 1, 2010. For purposes of this subdivision, the

definition of section 179 property has the same meaning as under section 179

of the Code as of January 1, 2011. These adjustments do not result in a

difference in basis of the affected assets for State and federal income tax

purposes.

(15a) For taxable years 2012 and 2013, eighty-five percent (85%) of the amount by

which the taxpayer's expense deduction under section 179 of the Code for

property placed in service in taxable year 2012 or 2013 exceeds the amount

that would have been allowed for the respective taxable year under section

179 of the Code as of May 1, 2010. For purposes of this subdivision, the

definition of section 179 property has the same meaning as under section 179

of the Code as of January 2, 2013. These adjustments do not result in a

difference in basis of the affected assets for State and federal income tax

purposes.

(16) For taxable year 2013, the amount of the taxpayer's deduction for qualified

tuition and related expenses under section 222 of the Code. The purpose of

this subdivision is to decouple from the extension of the federal deduction

under section 207 of the American Taxpayer Relief Act of 2012.

(17) For taxable year 2013, the amount excluded from the taxpayer's gross income

for a qualified charitable distribution from an individual retirement plan by a

person who has attained age 70 1/2 under section 408(d)(8) of the Code. The

purpose of this subdivision is to decouple from the extension of the income

exclusion under section 208 of the American Taxpayer Relief Act of 2012.


for the discharge of qualified principal residence indebtedness under section

108 of the Code. The purpose of this subdivision is to decouple from the

extension of the income exclusion under section 202 of the American

Taxpayer Relief Act of 2012.

(19) For taxable year 2013, the amount of the taxpayer's deduction for mortgage

insurance premiums as qualified residence interest under section 163 of the

Code. The purpose of this subdivision is to decouple from the extension of the

income exclusion under section 204 of the American Taxpayer Relief Act of

2012.

(20) Amounts that were recognized as income under federal law but not under

State law due to a taxpayer's use of the installment method set out in G.S.

105-142(f) prior to January 1, 1989, shall be added to taxable income in the

taxpayer's first taxable year beginning on or after January 1, 1989.

(21) A loss or deduction that was incurred or paid and deducted from State taxable

income in a taxable year beginning before January 1, 1989, and is carried

forward and deducted in a taxable year beginning on or after January 1, 1989,

under the Code.

(22) The amount required to be added under G.S. 105-134.6A when the State



(d) Other Adjustments. – In calculating North Carolina taxable income, a taxpayer must

make the following adjustments to adjusted gross income.

(1) The amount of inheritance or estate tax attributable to an item of income in

respect of a decedent required to be included in gross income under the Code,

adjusted as provided in G.S. 105-134.5, 105-134.6, and 105-134.6A, may be

deducted in the year the item of income is included. The amount of

inheritance or estate tax attributable to an item of income in respect of a

decedent is (i) the amount by which the inheritance or estate tax paid under

Article 1 or 1A of this Chapter on property transferred to a beneficiary by a

decedent exceeds the amount of the tax that would have been payable by the

beneficiary if the item of income in respect of a decedent had not been

included in the property transferred to the beneficiary by the decedent, (ii)

multiplied by a fraction, the numerator of which is the amount required to be

included in gross income for the taxable year under the Code, adjusted as

provided in G.S. 105-134.5, 105-134.6, and 105-134.6A, and the denominator

of which is the total amount of income in respect of a decedent transferred to

the beneficiary by the decedent. For an estate or trust, the deduction allowed

by this subdivision shall be computed by excluding from the gross income of

the estate or trust the portion, if any, of the items of income in respect of a

decedent that are properly paid, credited, or to be distributed to the

beneficiaries during the taxable year.

The Secretary may provide to a beneficiary of an item of income in

respect of a decedent any information contained on an inheritance or estate tax

return that the beneficiary needs to compute the deduction allowed by this

subdivision.

(2) The taxpayer may deduct the amount by which the taxpayer's deductions

allowed under the Code were reduced, and the amount of the taxpayer's

deductions that were not allowed, because the taxpayer elected a federal tax

credit in lieu of a deduction. This deduction is not allowed in the following

circumstances:

a. If a similar credit is allowed by this Chapter for the amount.

b. For taxable year 2013, if the taxpayer elected to claim the Hope

scholarship credit, the Lifetime Learning credit, or the American

Opportunity tax credit under section 25A of the Code in lieu of a

deduction for qualified tuition and expenses under section 222 of the

Code.

(3) The taxpayer shall add to adjusted gross income the amount of any recovery

during the taxable year not included in adjusted gross income, to the extent the

taxpayer's deduction of the recovered amount in a prior taxable year reduced

the taxpayer's tax imposed by this Part but, due to differences between the

Code and this Part, did not reduce the amount of the taxpayer's tax imposed by

the Code. The taxpayer may deduct from adjusted gross income the amount of

any recovery during the taxable year included in adjusted gross income under

section 111 of the Code, to the extent the taxpayer's deduction of the

recovered amount in a prior taxable year reduced the taxpayer's tax imposed


by the Code but, due to differences between the Code and this Part, did not

reduce the amount of the taxpayer's tax imposed by this Part.

(4) A taxpayer may deduct from adjusted gross income the amount, not to exceed

two thousand five hundred dollars ($2,500), contributed to an account in the

Parental Savings Trust Fund of the State Education Assistance Authority

established pursuant to G.S. 116-209.25. In the case of a married couple filing

a joint return, the maximum dollar amount of the deduction is five thousand

dollars ($5,000).

(5) The taxpayer shall add to adjusted gross income the amount deducted in a

prior taxable year under subdivision (4) of this subsection to the extent this

amount was withdrawn from the Parental Savings Trust Fund of the State

Education Assistance Authority established pursuant to G.S. 116-209.25 and

not used to pay for the qualified higher education expenses of the designated

beneficiary, unless the withdrawal was made without penalty under section

529 of the Code due to the death or permanent disability of the designated

beneficiary.

(6) A taxpayer who is an eligible firefighter or an eligible rescue squad worker

may deduct from adjusted gross income the sum of two hundred fifty dollars

($250.00). In the case of a married couple filing a joint return, each spouse

may qualify separately for the deduction allowed under this subdivision. In

order to claim the deduction allowed under this subdivision, the taxpayer must

submit with the tax return any documentation required by the Secretary. An

individual may not claim a deduction as both an eligible firefighter and as an

eligible rescue squad worker in a single taxable year. The following

definitions apply in this subdivision:

a. Eligible firefighter. – An unpaid member of a volunteer fire

department who attended at least 36 hours of fire department drills and

meetings during the taxable year.

b. Eligible rescue squad worker. – An unpaid member of a volunteer

rescue or emergency medical services squad who attended at least 36

hours of rescue squad training and meetings during the taxable year.

(7) The taxpayer shall add to taxable income the amounts listed in this

subdivision. An addition is not required under this subdivision for a net

operating loss deduction of an eligible small business as defined under section

172(b)(1)(H) of the Code. The amounts are:

a. For taxable years 2003, 2004, and 2005, the amount of any 2008 net

operating loss deduction claimed on a federal return under section

172(b)(1)(H) or section 810(b)(4) of the Code.

b. For taxable years 2004, 2005, and 2006, the amount of any 2009 net

operating loss deduction claimed on a federal return under section

172(b)(1)(H) or section 810(b)(4) of the Code.

(8) For taxable years 2011 through 2013, a taxpayer who made an addition under

subdivision (7) of this subsection may deduct the following amounts:

a. For a taxpayer who made an addition under sub-subdivision (7)a. of

this subsection, one-third of the taxpayer's net operating loss absorbed

on the taxpayer's 2003, 2004, and 2005 federal returns under section


172(b)(1)(H) or section 810(b)(4) of the Code, with the exception of

the portion of the net operating loss of an eligible small business

absorbed on the taxpayer's 2003, 2004, and 2005 federal returns.

b. For a taxpayer who made an addition under sub-subdivision (7)b. of

this subsection, one-third of the taxpayer's net operating loss absorbed

on the taxpayer's 2004, 2005, and 2006 federal returns under section

172(b)(1)(H) or section 810(b)(4) of the Code, with the exception of

the portion of the net operating loss of an eligible small business

absorbed on the taxpayer's 2004, 2005, and 2006 federal returns.

(9) To the extent a deduction has not been claimed for educator expenses in

determining federal adjusted gross income, an eligible educator may deduct an

amount not to exceed two hundred fifty dollars ($250.00) paid or incurred in

connection with items listed in this subdivision. This deduction is allowed

only to the extent the expense has not been claimed under section 162 of the

Code for the taxable year. For purposes of this subdivision, the term "eligible

educator" has the same meaning as defined in section 62 of the Code, as it

existed on December 31, 2011. In the case of a married couple filing a joint

return where both spouses are eligible educators, the maximum dollar amount

is five hundred dollars ($500.00).

a. Books.

b. Supplies, other than nonathletic supplies for courses of instruction in

health or physical education.

c. Computer equipment, including related software and services.

d. Supplementary materials used by the eligible educator in the

classroom.

(10) For taxable year 2013, the taxpayer who elects to itemize deductions under

G.S. 105-134.6(a2) may deduct the amount that would have been allowed as a

charitable deduction under section 170 of the Code had the taxpayer not

elected to take the income exclusion under 408(d)(8) of the Code. However,

this deduction is not subject to the charitable contribution limitation and

carryover provisions under section 170 of the Code, but it is subject to the

overall limitation on itemized deductions under section 68 of the Code.

(11) The transitional adjustments provided in Part 1A of this Article shall be made

with respect to a shareholder's pro rata share of S Corporation income.

(12) The Secretary may by rule require other adjustments to be made to taxable

income as necessary to assure that the transition to the tax changes effective

January 1, 1989, will not result in double taxation of income, exemption of

otherwise taxable income from taxation under this Division, or double

allowance of deductions. (1989, c. 718, s. 2; c. 728, s. 1.4; c. 770, ss. 41.2,

41.3; c. 792, s. 1.1; 1989 (Reg. Sess., 1990), c. 984, s. 4; c. 1002, s. 2; 1991, c.

45, s. 9; c. 453, s. 1; c. 689, ss. 253, 254; 1991 (Reg. Sess., 1992), c. 1007, s.

3; 1993, c. 12, s. 8; c. 443, s. 8; c. 485, s. 9; 1993 (Reg. Sess., 1994), c. 745, s.

7; 1995, c. 17, s. 5; c. 42, ss. 1, 2(a), (b); c. 46, s. 3; c. 370, s. 3; 1996, 2nd Ex.

Sess., c. 13, s. 8.1; c. 14, s. 9; 1997-226, s. 3; 1997-328, s. 1; 1997-388, s. 4;

1997-525, s. 1; 1998-98, s. 69; 1998-171, ss. 2, 3; 1998-212, ss. 29A.2(c),

29A.13(a); 1999-333, s. 3; 1999-463, Ex Sess., s. 4.6 (a); 2000-140, ss. 65,


93.1(a); 2001-424, ss. 12.2(b), 34.19(a), (b); 2002-126, ss. 30B.1(a), 30B.1(b),

30C.2(b), 30C.2(d), 30C.4; 2003-284, s. 37A.2; 2005-1, s. 5.7(a); 2005-276,

ss. 35.1(e), 39.1(f); 2005-435, s. 55; 2006-17, ss. 2, 3; 2006-66, ss. 24.12(a),

24.18(e); 2006-220, s. 3; 2006-221, s. 27(a); 2007-323, ss. 31.19(a)-(d),

31.24(a); 2007-397, s. 13(c); 2008-107, ss. 28.1(e), (f), (h), 28.25(c), 28.27(b),

(c); 2008-134, s. 2(c); 2009-445, s. 43; 2009-451, s. 27A.6(e), (f); 2010-31, s.

31.1(b); 2011-5, ss. 2(c), (d), 3(d), (c); 2011-106, s. 1; 2011-145, s. 31A.1(c);

2011-330, ss. 11, 12(b)-(e), 13, 36; 2012-74, s. 2(a); 2012-79, s. 1.3; 2013-10,

ss. 2(c), (d), 3(c), (d), 5(a), (b), 6(a), (b), 7, 8; 2013-414, ss. 5(a), 6(a)-(e),

34(c), 35(a); 2015-6, s. 2.20(d).)

§ 105-134.6A. (Repealed effective for taxable years beginning on or after January 1, 2014)

Adjustments when State decouples from federal accelerated depreciation and

expensing.


depreciation deduction for that property under section 168(k) or 168(n) of the Code must add to

the taxpayer's federal taxable income or adjusted gross income, as appropriate, eighty-five

percent (85%) of the amount taken for that year under those Code provisions. For taxable years

before 2012, the taxpayer must add the amount to the taxpayer's federal taxable income. For

taxable year 2012 and after, the taxpayer must add the amount to the taxpayer's adjusted gross

income. A taxpayer is allowed to deduct twenty percent (20%) of the add-back in each of the

first five taxable years following the year the taxpayer is required to include the add-back in

income.







2010.




below must add to the taxpayer's federal taxable income or adjusted gross income, as

appropriate, eighty-five percent (85%) of the amount by which the taxpayer's expense deduction

under section 179 of the Code exceeds the dollar and investment limitation listed in the table

below for that taxable year. For taxable years before 2012, the taxpayer must add the amount to

the taxpayer's federal taxable income. For taxable year 2012 and after, the taxpayer must add the

amount to the taxpayer's adjusted gross income.




85% Add-Back

2010 $250,000 $800,000

2011 $250,000 $800,000

2012 $250,000 $800,000


2013 $25,000 $200,000









provisions of subsection (a) of this section, the transferor and any owner in a transferor are not

allowed any remaining future bonus depreciation deductions associated with the transferred

asset. This subsection applies only to the extent that each transferor or owner in a transferor that

added bonus depreciation to its federal taxable income or adjusted gross income associated with

the transferred asset certifies in writing to the transferee, that the transferor or owner in a

transferor will not take any remaining future bonus depreciation deduction associated with the

transferred asset.







met:

(1) The transferor or any owner in a transferor has not taken the bonus

depreciation deduction on a prior return.

(2) The transferor is not allowed any remaining future bonus depreciation

deductions associated with the transferred asset and each transferor or owner

in a transferor certifies in writing to the transferee that the transferor or owner

in a transferor will not take any remaining deductions allowed under

subsection (a) of this section for tax years beginning on or after January 1,

2013, for depreciation associated with the transferred asset.

(3) The amount of the basis adjustment under this subsection is limited to the total

remaining future bonus depreciation deductions forfeited by the transferor and

any owner in the transferor at the time of the transfer.

(g) Tax Basis. – For transactions described in subsection (e) or (f) of this section,

adjusted gross income must be increased or decreased to account for any difference in the

amount of depreciation, amortization, or gains or losses applicable to property that has been

depreciated or amortized by use of a different basis or rate for State income tax purposes than

used for federal income tax purposes.

(h) Definitions. – The following definitions apply in this section:

(1) Owner in a transferor. – One or more of the following of a transferor:

a. A partner, shareholder, or member.

b. A beneficiary subject to tax under Part 2 or 3 of Article 4 of this

Chapter.

(2) Transferor. – An individual, partnership, corporation, S Corporation, limited

liability company, or an estate or trust that does not fully distribute income to


its beneficiaries. (2013-414, ss. 34(d), 58(b); 2014-3, s. 2.1(b); 2015-6, s.

2.8(a).)

§ 105-134.7. Transitional adjustments.

(a) Repealed by Session Laws 2013-414, s. 6(f), effective for taxable years beginning on


(1), (2) Repealed by Session Laws 2013-414, s. 6(f), effective for taxable years


(3) Recodified as G.S. 105-134.6(b)(24) and (c)(20) by Session Laws 2013-414,

s. 6(a) and (c), effective for taxable years beginning on or after January 1,

2012.

(4), (5) Repealed by Session Laws 2013-414, s. 6(f), effective for taxable years


(6) Recodified as G.S. 105-134.6(c)(21) by Session Laws 2013-414, s. 6(b),

effective for taxable years beginning on or after January 1, 2012.

(7) Recodified as G.S. 105-134.6(b)(11) by Session Laws 2013-414, s. 6(d),

effective for taxable years beginning on or after January 1, 2012.

(b) Recodified as G.S. 105-134.6(d)(12) by Session Laws 2013-414, s. 6(e), effective for

taxable years beginning on or after January 1, 2012. (1989, c. 728, s. 1.4; 1993, c. 485, s. 10;

1998-98, s. 91;2013-316, s. 1.1(b); 2013-414, s. 6(a)-(f).)


see note) Inventory.

Whenever, in the opinion of the Secretary, it is necessary in order clearly to determine the

income of any taxpayer, inventories shall be taken by the taxpayer as prescribed by the

Secretary, conforming as nearly as possible to the best accounting practice in the trade or

business and most clearly reflecting the income. (1989, c. 728, s. 1.4; 2013-316, s. 1.1(b).)

§§ 105-135 through 105-149: Repealed by Session Laws 1989, c. 728, s. 1.3.


§ 105-151. (Recodified effective for taxable years beginning on or after January 1, 2014)

Tax credits for income taxes paid to other states by individuals.

(a) An individual who is a resident of this State is allowed a credit against the taxes

imposed by this Part for income taxes imposed by and paid to another state or country on income

taxed under this Part, subject to the following conditions:

(1) The credit is allowed only for taxes paid to another state or country on income

derived from sources within that state or country that is taxed under its laws

irrespective of the residence or domicile of the recipient, except that whenever

a taxpayer who is deemed to be a resident of this State under the provisions of

this Part is deemed also to be a resident of another state or country under the

laws of that state or country, the Secretary may allow a credit against the taxes

imposed by this Part for taxes imposed by and paid to the other state or

country on income taxed under this Part.


(2) The fraction of the gross income, as calculated under the Code and adjusted as

provided in G.S. 105-134.6 and G.S. 105-134.6A, that is subject to income tax

in another state or country shall be ascertained, and the North Carolina net

income tax before credit under this section shall be multiplied by that fraction.

The credit allowed is either the product thus calculated or the income tax

actually paid the other state or country, whichever is smaller.

(3) Receipts showing the payment of income taxes to another state or country and

a true copy of a return or returns upon the basis of which the taxes are

assessed shall be filed with the Secretary when the credit is claimed. If credit

is claimed on account of a deficiency assessment, a true copy of the notice

assessing or proposing to assess the deficiency, as well as a receipt showing

the payment of the deficiency, shall be filed.

(b) If any taxes paid to another state or country for which a taxpayer has been allowed a

credit under this section are at any time credited or refunded to the taxpayer, a tax equal to that

portion of the credit allowed for the taxes so credited or refunded is due and payable from the

taxpayer and is subject to the penalties and interest provided in Subchapter I of this Chapter.

(1939, c. 158, s. 325; 1941, c. 50, s. 5; c. 204, s. 1; 1943, c. 400, s. 4; 1957, c. 1340, s. 4; 1963, c.

1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1989, c. 728, s. 1.5; 1989 (Reg. Sess., 1990),

c. 814, s. 17; 1998-98, s. 92; 2013-316, s. 1.1(a); 2013-414, s. 5(b).)


see note) Credit for construction of dwelling units for handicapped persons.

An owner of multifamily rental units located in this State is allowed a credit against the tax

imposed by this Part equal to five hundred fifty dollars ($550.00) for each dwelling unit

constructed by the owner that conforms to Volume I-C of the North Carolina Building Code for

the taxable year within which the construction of the dwelling unit is completed. The credit is

allowed only for dwelling units completed during the taxable year that were required to be built

in compliance with Volume I-C of the North Carolina Building Code. If the credit allowed by

this section exceeds the tax imposed by this Part reduced by all other credits allowed, the excess

may be carried forward for the next succeeding year. In order to claim the credit allowed by this

section, the taxpayer must file with the income tax return a copy of the occupancy permit on the

face of which is recorded by the building inspector the number of units completed during the

taxable year that conform to Volume I-C of the North Carolina Building Code. After recording

the number of these units on the face of the occupancy permit, the building inspector shall

promptly forward a copy of the permit to the Building Accessibility Section of the Department of

Insurance. (1973, c. 910, s. 2; 1979, c. 803, ss. 3, 4; 1981, c. 682, s. 17; 1989, c. 728, s. 1.6;

1997-6, s. 4; 1998-98, s. 69; 1998-100, s. 1; 2013-316, s. 1.1(b).)

§ 105-151.2. Repealed by Session Laws 1999-342, s. 1, effective for taxable years beginning on


§ 105-151.3. Repealed by Session Laws 1983 (Regular Session 1984), c. 1004, s. 2.

§ 105-151.4: Repealed by Session Laws 1989, c. 728, s. 1.8.


§ 105-151.5. Repealed by Session Laws 1999-342, s. 1, effective for taxable years beginning on


§ 105-151.6: Expired.

§ 105-151.6A: Repealed by Session Laws 1989, c. 728, s. 1.11.

§§ 105-151.7 through 105-151.10: Repealed by Session Laws 1999-342, s. 1, effective for

taxable years beginning on or after January 1, 2000.


see note) Credit for child care and certain employment-related expenses.

(a) Credit. – A person who is allowed a credit against federal income tax for a percentage

of employment-related expenses under section 21 of the Code shall be allowed as a credit against

the tax imposed by this Part an amount equal to the applicable percentage of the

employment-related expenses as defined in section 21(b)(2) of the Code. In order to claim the

credit allowed by this section, the taxpayer must provide with the tax return the information

required by the Secretary.

(a1) Applicable Percentage. – For employment-related expenses that are incurred only

with respect to one or more dependents who are seven years old or older and are not physically

or mentally incapable of caring for themselves, the applicable percentage is the appropriate

percentage in the column labeled "Percentage A" in the table below, based on the taxpayer's

adjusted gross income determined under the Code. For employment-related expenses with

respect to any other qualifying individual, the applicable percentage is the appropriate percentage

in the column labeled "Percentage B" in the table below, based on the taxpayer's adjusted gross

income determined under the Code.

Filing Status Adjusted Gross Percentage A Percentage B

Income

Head of Up to $20,000 9% 13%

Household

Over $20,000

up to $32,000 8% 11.5%

Over $32,000 7% 10%

Surviving

Spouse or

Joint Return Up to $25,000 9% 13%

Over $25,000

up to $40,000 8% 11.5%

Over $40,000 7% 10%

Single Up to $15,000 9% 13%


Over $15,000

up to $24,000 8% 11.5%

Over $24,000 7% 10%

Married

Filing

Separately Up to $12,500 9% 13%

Over $12,500

up to $20,000 8% 11.5%

Over $20,000 7% 10%

(b) Employment Related Expenses. – The amount of employment-related expenses for

which a credit may be claimed may not exceed three thousand dollars ($3,000) if the taxpayer's

household includes one qualifying individual, as defined in section 21(b)(1) of the Code, and

may not exceed six thousand dollars ($6,000) if the taxpayer's household includes more than one

qualifying individual. The amount of employment-related expenses for which a credit may be

claimed is reduced by the amount of employer-provided dependent care assistance excluded

from gross income.

(c) Limitations. – A nonresident or part-year resident who claims the credit allowed by

this section shall reduce the amount of the credit by multiplying it by the fraction calculated

under G.S. 105-134.5(b) or (c), as appropriate. No credit shall be allowed under this section for

amounts deducted in calculating North Carolina taxable income. The credit allowed by this

section may not exceed the amount of tax imposed by this Part for the taxable year reduced by

the sum of all credits allowable, except for payments of tax made by or on behalf of the taxpayer.

(1981, c. 899, s. 1; 1985, c. 656, ss. 8-11; 1989, c. 728, s. 1.16; 1993, c. 432, s. 1; 1998-98, ss.

69, 99; 1998-100, s. 2; 2006-18, s. 9; 2013-316, s. 1.1(b); 2013-414, s. 5(c).)


see note) Credit for certain real property donations.

(a) An individual or pass-through entity that makes a qualified donation of an interest in

real property located in North Carolina during the taxable year that is useful for (i) public beach

access or use, (ii) public access to public waters or trails, (iii) fish and wildlife conservation, (iv)

forestland or farmland conservation, (v) watershed protection, (vi) conservation of natural areas

as that term is defined in G.S. 113A-164.3(3), (vii) conservation of natural or scenic river areas

as those terms are used in G.S. 113A-34, (viii) conservation of predominantly natural parkland,

or (ix) historic landscape conservation is allowed a credit against the tax imposed by this Part

equal to twenty-five percent (25%) of the fair market value of the donated property interest. To

be eligible for this credit, the interest in property must be donated in perpetuity for one of the

qualifying uses listed in this subsection and accepted in perpetuity for the qualifying use for

which the property is donated. The person to whom the property is donated must be the State, a

local government, or a body that is both organized to receive and administer lands for

conservation purposes and qualified to receive charitable contributions under the Code. Lands

required to be dedicated pursuant to local governmental regulation or ordinance and dedications


made to increase building density levels permitted under a regulation or ordinance are not

eligible for this credit.

To support the credit allowed by this section, the taxpayer must file with the income tax

return for the taxable year in which the credit is claimed the following:

(1) A certification by the Department of Environment and Natural Resources that

the property donated is suitable for one or more of the valid public benefits set

forth in this subsection. The certification for a qualified donation made by a

pass-through entity must be filed by the pass-through entity.

(2) A self-contained or summary appraisal report as defined in Standards Rule 2-2

in the latest edition of the Uniform Standards of Professional Appraisal

Practice as promulgated by the Appraisal Foundation for the property. For fee

simple absolute donations of real property, a taxpayer may submit

documentation of the county's appraised value of the donated property, as

adjusted by the sales assessment ratio, in lieu of an appraisal report.

(a1) Individuals. – The aggregate amount of credit allowed to an individual in a taxable

year under this section for one or more qualified donations made during the taxable year,

whether made directly or indirectly as owner of a pass-through entity, may not exceed two

hundred fifty thousand dollars ($250,000). In the case of property owned by a married couple, if

both spouses are required to file North Carolina income tax returns, the credit allowed by this

section may be claimed only if the spouses file a joint return. The aggregate amount of credit

allowed to a husband and wife filing a joint tax return may not exceed five hundred thousand

dollars ($500,000). If only one spouse is required to file a North Carolina income tax return, that

spouse may claim the credit allowed by this section on a separate return.

(a2) Pass-Through Entities. – The aggregate amount of credit allowed to a pass-through

entity in a taxable year under this section for one or more qualified donations made during the

taxable year, whether made directly or indirectly as owner of another pass-through entity, may

not exceed five hundred thousand dollars ($500,000). Each individual who is an owner of a

pass-through entity is allowed as a credit an amount equal to the owner's allocated share of the

credit to which the pass-through entity is eligible under this subsection, not to exceed two

hundred fifty thousand dollars ($250,000). Each corporation that is an owner of a pass-through

entity is allowed as a credit an amount equal to the owner's allocated share of the credit to which

the pass-through entity is eligible under this subsection, not to exceed five hundred thousand

dollars ($500,000). If an owner's share of the pass-through entity's credit is limited due to the

maximum allowable credit under this section for a taxable year, the pass-through entity and its

owners may not reallocate the unused credit among the other owners.

(b) The credit allowed by this section may not exceed the amount of tax imposed by this

Part for the taxable year reduced by the sum of all credits allowed, except payments of tax made

by or on behalf of the taxpayer.

Any unused portion of this credit may be carried forward for the next succeeding five years.

(c) Repealed by Session Laws 1998-212, s. 29A.13(b).

(d) Repealed by Session Laws 2007-309, s. 2, effective for taxable years beginning on or


(e) In the case of marshland for which a claim has been filed pursuant to G.S. 113-205,

the offer of donation must be made before December 31, 2003 to qualify for the credit allowed

by this section.


(f) Repealed by Session Laws 2007-309, s. 2, effective for taxable years beginning on or

after January 1, 2007. (1983, c. 793, s. 3; 1985, c. 278, s. 2; 1989, c. 716, s. 2; c. 727, s. 218(43);

c. 728, s. 1.17; 1989 (Reg. Sess., 1990), c. 869, s. 3; 1991, c. 45, s. 10; c. 453, ss. 2, 4; 1991

(Reg. Sess., 1992), c. 930, s. 21; 1993 (Reg. Sess., 1994), c. 717, s. 4; 1997-226, s. 2; 1997-443,

s. 11A.119(a); 1998-98, s. 69; 1998-179, s. 2; 1998-212, s. 29A.13(b), (d); 2001-335, s. 2;

2002-72, s. 15(b); 2004-134, s. 1; 2006-66, s. 24.15(a); 2007-309, s. 2; 2009-445, s. 9(d);

2010-167, s. 5(b); 2013-316, s. 1.1(b).)


see note) Credit for conservation tillage equipment.

(a) A taxpayer who purchases conservation tillage equipment for use in a farming

business, including tree farming, shall be allowed as a credit against the tax imposed by this Part

an amount equal to twenty-five percent (25%) of the cost of the equipment paid during the

taxable year. This credit may not exceed two thousand five hundred dollars ($2,500) for any

taxable year. The credit may be claimed only by the first purchaser of the equipment and may not

be claimed by a person who purchases the equipment for resale or for use outside this State. This

credit may not exceed the amount of tax imposed by this Part for the taxable year reduced by the

sum of all credits allowable, except tax payments made by or on behalf of the taxpayer. If the

credit allowed by this section exceeds the tax imposed under this Part, the excess may be carried

forward for the next succeeding five years. The basis in any equipment for which a credit is

allowed under this section shall be reduced by the amount of the credit allowable.

(b) As used in this section, "conservation tillage equipment" means:

(1) A planter such as a planter commonly known as a "no-till" planter designed to

minimize disturbance of the soil in planting crops or trees, including

equipment that may be attached to equipment already owned by the taxpayer;

or

(2) Equipment designed to minimize disturbance of the soil in reforestation site

preparation, including equipment that may be attached to equipment already

owned by the taxpayer; provided, however, this shall include only those items

of equipment generally known as a "KG-Blade", a "drum-chopper", or a

"V-Blade".

(c) In the case of conservation tillage equipment owned jointly by a husband and wife, if


section may be claimed only if the spouses file a joint return. If only one spouse is required to

file a North Carolina income tax return, that spouse may claim the credit allowed by this section

on a separate return. (1983 (Reg. Sess., 1984), c. 969, s. 2; 1989, c. 728, s. 1.18; 1991 (Reg.

Sess., 1992), c. 930, s. 22; 1998-98, s. 100; 2013-316, s. 1.1(b).)


see note) Credit for gleaned crop.

(a) A taxpayer who grows a crop and permits the gleaning of the crop during the taxable

year shall be allowed as a credit against the tax imposed by this Part an amount equal to ten

percent (10%) of the market price of the quantity of the gleaned crop. This credit may not exceed

the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits

allowable, except tax payments made by or on behalf of the taxpayer. In order to claim the credit

allowed under this section, the taxpayer must add the market price of the gleaned crop to taxable


income as provided in G.S. 105-134.6(c). Any unused portion of the credit may be carried

forward for the next succeeding five years.

(b) The following definitions apply to this section:

(1) "Gleaning" means the harvesting of a crop that has been donated by the

grower to a nonprofit organization which will distribute the crop to

individuals or other nonprofit organizations it considers appropriate recipients

of the food.

(2) "Market price" means the season average price of the crop as determined by

the North Carolina Crop and Livestock Reporting Service in the Department

of Agriculture and Consumer Services, or the average price of the crop in the

nearest local market for the month in which the crop is gleaned if the Crop

and Livestock Reporting Service does not determine the season average price

for that crop; and

(3) "Nonprofit organization" means an organization to which charitable

contributions are deductible from gross income under the Code. (1983 (Reg.

Sess., 1984), c. 1018, s. 2; 1989, c. 728, s. 1.19; 1991, c. 453, s. 3; 1997-261,

s. 13; 1998-98, s. 101; 2013-316, s. 1.1(b).)

§ 105-151.15: Repealed by Session Laws 1996, 2nd Extra Session, c. 14, s. 1.


§ 105-151.17: Recodified as § 105-129.8 by Session Laws 1996, 2nd Extra Session, c. 13, s.

3.4.


see note) Credit for the disabled.

(a) Disabled Taxpayer. – A taxpayer who (i) is retired on disability, (ii) at the time of

retirement, was permanently and totally disabled, and (iii) claims a federal income tax credit

under section 22 of the Code for the taxable year, is allowed as a credit against the tax imposed

by this Part an amount equal to one-third of the amount of the federal income tax credit for

which the taxpayer is eligible under section 22 of the Code.

(b) Disabled Dependent. – If a dependent or spouse for whom a taxpayer is allowed an

exemption under the Code is permanently and totally disabled, the taxpayer is allowed a credit

against the tax imposed by this Part. In order to claim the credit allowed by this subsection, the

taxpayer must attach to the tax return on which the credit is claimed a statement from a physician

or local health department certifying that the dependent or spouse for whom the credit is claimed

is permanently and totally disabled, as defined in this section. The amount of the credit allowed

is determined as follows: For a taxpayer whose North Carolina adjusted gross income does not

exceed the appropriate income amount provided in the table below, based on the taxpayer's filing

status, the credit allowed is the appropriate initial credit provided in the table below. For a

taxpayer whose North Carolina adjusted gross income does exceed the appropriate income

amount, the credit allowed is the appropriate initial credit reduced by four dollars ($4.00) for

every one thousand dollars ($1,000) by which the taxpayer's North Carolina adjusted gross

income exceeds the appropriate income amount.

Initial Income


Filing Status Credit Amount

Head of Household $64.00 $16,000

Surviving Spouse or Joint Return $80.00 $20,000

Single $48.00 $12,000

Married Filing Separately $40.00 $10,000


(1) North Carolina adjusted gross income. – Adjusted gross income, as

determined under the Code, adjusted as provided in G.S. 105-134.6 and G.S.

105-134.6A.

(2) Permanently and totally disabled. – Unable to engage in any substantial

gainful activity by reason of any medically determinable physical or mental

impairment that can be expected to result in death or that has lasted or can be

expected to last for a continuous period of not less than 12 months. For the

purpose of this section, a minor is permanently and totally disabled if the

impact of the impairment on the minor's ability to function is equivalent in

severity to that which would make an adult unable to engage in any

substantial gainful activity.

(d) Limitations. – A nonresident or part-year resident who claims the credit allowed by


under G.S. 105-134.5(b) or (c), as appropriate. The credit allowed under this section may not


credits allowable, except payments of tax made by or on behalf of the taxpayer. (1989, c. 728, s.

1.22; 1989 (Reg. Sess., 1990), c. 984, s. 5; 1998-98, ss. 69, 102; 2013-316, s. 1.1(b); 2013-414, s.

7.)

§ 105-151.19: Repealed by Session Laws 1996, 2nd Extra Session, c. 14, s. 2.


see note) Credit or partial refund for tax paid on certain federal retirement

benefits.

(a) Purpose; Definitions. – The purpose of this section is to benefit certain retired federal

government workers on account of their public service. The following definitions apply in this

section:

(1) Federal retirement benefits. – Retirement benefits received from one or more

federal government retirement plans.

(2) Net pension tax. – The amount of tax a taxpayer paid under this Part for the

1985, 1986, 1987, and 1988 tax years on federal retirement benefits, without

interest, less any part of the tax for which the taxpayer received a credit under

this section before 1997 and any part of the tax refunded to the taxpayer

before 1997.

(3) Tax year. – The taxpayer's taxable year beginning on a day in the applicable

calendar year.

(b) Credit. – A taxpayer who received federal retirement benefits during the 1985, 1986,

1987, or 1988 tax year may claim a credit against the tax imposed by this Part equal to the net

pension tax on those benefits. The credit allowed under this section shall be taken in equal

installments over the taxpayer's first three taxable years beginning on or after January 1, 1996.


The credit allowed under this section may not exceed the amount of tax imposed by this Part

reduced by the sum of all credits allowed against the tax, except payments of tax made by or on

behalf of the taxpayer; any unused portion of a credit installment may be carried forward to the

1999 and 2000 tax years.

(c) Partial Refund Alternative. – If the amount of tax imposed by this Part on the

taxpayer for the taxpayer's 1996 tax year, reduced by the sum of all credits allowed against the

tax except payments of tax made by or on behalf of the taxpayer, is less than five percent (5%) of

the taxpayer's net pension tax for which credit is allowed, the taxpayer is eligible to elect a partial

refund under this subsection in lieu of claiming the credit. The partial refund allowed under this

subsection is equal to the lesser of eighty-five percent (85%) of the taxpayer's net pension tax or

the reduced amount determined by the Secretary as provided in this subsection. To elect the

partial refund, an eligible taxpayer must file with the Secretary on or before April 15, 1997, a

written request for a partial refund of the taxpayer's net pension. The Secretary shall calculate

from these requests eighty-five percent (85%) of the total amount of net pension tax for which

partial refunds have been claimed and, if this sum exceeds the amount in the Federal Retiree

Refund Account created in this section, shall allocate the amount in the Account among the

eligible taxpayers claiming partial refunds by reducing each taxpayer's claimed refund in

proportion to the size of the claimed refund. The Secretary shall remit these partial refunds

before January 1, 1998.

(d) Substantiation; Deceased Taxpayers. – In order to claim a refund or credit under this

section, a taxpayer must provide any information required by the Secretary to establish the

taxpayer's eligibility for tax benefit and the amount of the tax benefit. In the case of a taxpayer

who is deceased, the representative of the taxpayer's estate may claim the refund in the name of

the deceased taxpayer and, if the taxpayer does not qualify for a refund, the surviving spouse

may claim the deceased taxpayer's credit. If there is no surviving spouse, the representative of

the taxpayer's estate may claim the credit in the name of the taxpayer but may not carry forward

any unused portion of the credit to the 1999 or 2000 tax year.

(e) Federal Retiree Accounts. – There are created in the Department of Revenue two

special accounts to be known as the Federal Retiree Refund Account and the Federal Retiree

Administration Account. Funds in the Federal Retiree Refund Account shall be spent only for

partial refunds pursuant to subsection (c) of this section. The Department of Revenue may use

funds in the Federal Retiree Administration Account only for the costs of administering this

section. Funds in the Federal Retiree Refund Account and the Federal Retiree Administration

Account shall not revert to the General Fund until the Director of the Budget certifies that the

Department of Revenue has completed all duties necessary to implement this section, including

processing the escheat of refund checks that have not been cashed. (1989 (Reg. Sess., 1990), c.

984, s. 6; 1991, c. 45, s. 11; 1996, 2nd Ex. Sess., c. 19, s. 1; 1997-499, ss. 1, 2; 1998-98, s. 69;

2013-316, s. 1.1(b).)


see note) Credit for property taxes paid on farm machinery.

(a) Credit. – An individual engaged in the business of farming is allowed a credit against

the tax imposed by this Part equal to the amount of property taxes the individual paid at par

during the taxable year on farm machinery and on attachments and repair parts for farm

machinery. In addition, an individual shareholder of an S Corporation engaged in the business of

farming is allowed a credit against the tax imposed by this Part equal to the shareholder's pro rata


share of the amount of property taxes the S Corporation paid at par during the taxable year on

farm machinery and on attachments and repair parts for farm machinery. The total credit allowed

under this section may not exceed one thousand dollars ($1,000) for the taxable year and may not


credits allowable, except payments of tax made by or on behalf of the taxpayer. To claim the

credit, the taxpayer shall attach to the retur

n a copy of the tax receipt for the property taxes for which credit is claimed. The receipt must

indicate that the taxes have been paid and the amount and date of the payment.


(1) Farm machinery. – Machinery exempt from State sales tax under G.S.

105-164.13(1)b.

(2) Property taxes. – The principal amount of taxes levied and assessed by a

taxing unit under Subchapter II of this Chapter. The term does not include

costs, penalties, interest, or other charges that may be added to the principal

amount.

(3) Taxing unit. – Defined in G.S. 105-273.

(c) Adjustment. If a taxing unit gives a taxpayer a credit or refund for any of the property

taxes for which the taxpayer claimed a credit under this section, the taxpayer shall notify the

Secretary within 90 days. The Secretary shall then recompute the credit allowed under this

section and make any resulting adjustment of income tax for the taxable year for which the credit

was claimed. (1985, c. 656, s. 13(3); 1987, c. 804, s. 6; 1991, c. 45, s. 14(a); 1998-98, s. 103;

2001-414, s. 11; 2005-276, s. 33.25; 2013-316, s. 1.1(b).)

§ 105-151.22. (Repealed effective for taxable years beginning after January 1, 2014) Credit

for North Carolina State Ports Authority wharfage, handling, and throughput

charges.

(a) Credit. – A taxpayer whose waterborne cargo is loaded onto or unloaded from an

ocean carrier calling at the State-owned port terminal at Wilmington or Morehead City, without

consideration of the terms under which the cargo is moved, is allowed a credit against the tax

imposed by this Part. The amount of credit allowed is equal to the excess of the wharfage,

handling (in or out), and throughput charges assessed on the cargo for the current taxable year

over an amount equal to the average of the charges for the current taxable year and the two

preceding taxable years. The credit applies to forest products, break-bulk cargo and container

cargo, including less-than-container-load cargo, that is loaded onto or unloaded from an ocean

carrier calling at either the Wilmington or Morehead City port terminal and to bulk cargo that is

loaded onto or unloaded from an ocean carrier calling at the Morehead City port terminal. To

obtain the credit, taxpayers must provide to the Secretary a statement from the State Ports

Authority certifying the amount of charges for which a credit is claimed and any other

information required by the Secretary.

(b) Limitations. – This credit may not exceed fifty percent (50%) of the amount of tax


payments made by or on behalf of the taxpayer. Any unused portion of the credit may be carried

forward for the succeeding five years. The maximum cumulative credit that may be claimed by a

taxpayer under this section is two million dollars ($2,000,000).

(c) Definitions. – For purposes of this section, the terms "handling" (in or out) and

"wharfage" have the meanings provided in the State Ports Tariff Publications, "Wilmington


Tariff, Terminal Tariff #6," and "Morehead City Tariff, Terminal Tariff #1." For purposes of this

section, the term "throughput" has the same meaning as "wharfage" but applies only to bulk

products, both dry and liquid.

(c1) Report. – The Department must include in the economic incentives report required by



(2) The total amount of charges assessed for the taxable year.

(2a) The amount of the charges attributable to imports.

(2b) The amount of the charges attributable to exports.


(d) Sunset. – This section is repealed effective for taxable years beginning on or after

January 1, 2014. (1991 (Reg. Sess., 1992), c. 977, s. 2; 1993 (Reg. Sess., 1994), c. 681, s. 2;

1995, c. 17, s. 17; c. 495, ss. 2-4; 1996, 2nd Ex. Sess., c. 18, s. 15.3(b); 1997-443, s. 29.1 (a), (b),

(d); 1998-98, s. 69; 2001-517, ss. 1, 2; 2002-99, s. 6(d); 2003-414, s. 8; 2005-429, s. 2.11;

2007-527, s. 26(b); 2008-107, s. 28.5(c), (d); 2010-166, s. 1.15.)

§ 105-151.23: Recodified as §§ 105-129.35 through 105-129.37 by Session Laws 1999-389, s.

6, effective for taxable years beginning on or after January 1, 1999.

§ 105-151.24. (Recodified effective for taxable years beginning on or after January 1, 2014

– see editor's note) Credit for children.

(a) Credit. – An individual who is allowed a federal child tax credit under section 24 of

the Code for the taxable year and whose adjusted gross income (AGI), as calculated under the

Code, is less than the amount listed below is allowed a credit against the tax imposed by this Part

in an amount equal to one hundred dollars ($100.00) for each dependent child for whom the

individual is allowed the federal credit for the taxable year:

Filing Status AGI Married, filing jointly $100,000


Single 60,000

Married, filing separately 50,000.

(b) Limitations. – A nonresident or part-year resident who claims the credit allowed by




credits allowed, except payments of tax made by or on behalf of the taxpayer. (1995, c. 42, s. 3;

1998-98, s. 69; 2001-424, s. 34.20(a); 2002-126, s. 30B.2(a), (b); 2003-284, s. 39B.2; 2013-316,

s. 1.1(a).)


see note) Credit for construction of a poultry composting facility.

(a) Credit. – A taxpayer who constructs in this State a poultry composting facility as

defined in G.S. 106-549.51 for the composting of whole, unprocessed poultry carcasses from

commercial operations in which poultry is raised or produced is allowed as a credit against the

tax imposed by this Division an amount equal to twenty-five percent (25%) of the installation,

materials, and equipment costs of construction paid during the taxable year. This credit may not


exceed one thousand dollars ($1,000) for any single installation. The credit allowed by this

section may not exceed the amount of tax imposed by this Division for the taxable year reduced

by the sum of all credits allowable, except payments of tax by or on behalf of the taxpayer. The

credit allowed by this section does not apply to costs paid with funds provided the taxpayer by a

State or federal agency.

(b) Property Owned by the Entirety. – In the case of property owned by the entirety, if


section may be claimed only if the spouses file a joint return. If only one spouse is required to

file a North Carolina income tax return, that spouse may claim the credit allowed by this section

on a separate return. (1995, c. 543, s. 1; 1998-134, ss. 2, 3; 2013-316, s. 1.1(b).)

§ 105-151.26. (Effective for taxable years beginning before January 1, 2012) Credit for

charitable contributions by nonitemizers.

A taxpayer who elects the standard deduction under section 63 of the Code for federal tax

purposes is allowed as a credit against the tax imposed by this Part an amount equal to seven

percent (7%) of the taxpayer's excess charitable contributions. The taxpayer's excess charitable

contributions are the amount by which the taxpayer's charitable contributions for the taxable year

that would have been deductible under section 170 of the Code if the taxpayer had not elected

the standard deduction exceed two percent (2%) of the taxpayer's adjusted gross income as

calculated under the Code.

No credit shall be allowed under this section for amounts deducted from gross income in

calculating taxable income under the Code or for contributions for which a credit was claimed

under G.S. 105-151.12 or G.S. 105-151.14. A nonresident or part-year resident who claims the

credit allowed by this section shall reduce the amount of the credit by multiplying it by the

fraction calculated under G.S. 105-134.5(b) or (c), as appropriate. The credit allowed under this


the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer.

(1996, 2nd Ex. Sess., c. 13, s. 7.1; 1998-98, s. 69; 1998-183, s. 1; 2006-66, s. 24.18(d).)


January 1, 2013) Credit for charitable contributions by nonitemizers.

A taxpayer who elects the standard deduction under G.S. 105-134.6(a2) is allowed as a credit

against the tax imposed by this Part an amount equal to seven percent (7%) of the taxpayer's

excess charitable contributions. The taxpayer's excess charitable contributions are the amount by

which the taxpayer's charitable contributions for the taxable year that would have been

deductible under section 170 of the Code if the taxpayer had not elected the standard deduction

exceed two percent (2%) of the taxpayer's adjusted gross income.

No credit shall be allowed under this section for contributions for which a credit was claimed

under G.S. 105-151.12, 105-151.14, or 151.30 [105-151.30]. A nonresident or part-year resident

who claims the credit allowed by this section shall reduce the amount of the credit by

multiplying it by the fraction calculated under G.S. 105-134.5(b) or (c), as appropriate. The

credit allowed under this section may not exceed the amount of tax imposed by this Part for the

taxable year reduced by the sum of all credits allowed, except payments of tax made by or on

behalf of the taxpayer. (1996, 2nd Ex. Sess., c. 13, s. 7.1; 1998-98, s. 69; 1998-183, s. 1;

2006-66, s. 24.18(d); 2011-145, s. 31A.1(e); 2011-330, s. 36.)


§ 105-151.26. (Effective for taxable years beginning on or after January 1, 2013, and

repealed effective for taxable years beginning on or after January 1, 2014 – see

notes) Credit for charitable contributions by nonitemizers.

A taxpayer who elects the standard deduction under G.S. 105-134.6(a2) is allowed as a credit

against the tax imposed by this Part an amount equal to seven percent (7%) of the taxpayer's

excess charitable contributions. The taxpayer's excess charitable contributions are the amount by

which the taxpayer's charitable contributions for the taxable year that would have been

deductible under section 170 of the Code if the taxpayer had not elected the standard deduction

exceed two percent (2%) of the taxpayer's adjusted gross income. For tax year 2013, the

taxpayer's excess charitable contributions also include the amount by which the taxpayer's

charitable contributions for the taxable year would have been deductible under section 170 of the

Code had the taxpayer not elected to take the income exclusion under section 408(d)(8) of the

Code that exceed two percent (2%) of the taxpayer's adjusted gross income. For purposes of

computing this tax credit, charitable contributions are not subject to the charitable contribution

limitation and carryover provisions under section 170 of the Code.

No credit shall be allowed under this section for contributions for which a credit was claimed

under G.S. 105-151.12 or G.S. 105-151.14. A nonresident or part-year resident who claims the

credit allowed by this section shall reduce the amount of the credit by multiplying it by the

fraction calculated under G.S. 105-134.5(b) or (c), as appropriate. The credit allowed under this


the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer.

(1996, 2nd Ex. Sess., c. 13, s. 7.1; 1998-98, s. 69; 1998-183, s. 1; 2006-66, s. 24.18(d);

2011-145, s. 31A.1(e); 2011-330, s. 36; 2013-316, s. 1.1(b); 2013-414, s. 37(a).)

§ 105-151.27: Repealed by Session Laws 2001-424, s. 34.21(a), effective for taxable years



premiums paid on long-term care insurance.

(a) Credit. – A taxpayer whose adjusted gross income (AGI), as calculated under the

Code, is less than the amount listed in this section is allowed, as a credit against the tax imposed

by this Part, an amount equal to fifteen percent (15%) of the premium costs the taxpayer paid

during the taxable year on a qualified long-term care insurance contract that offers coverage to

either the taxpayer, the taxpayer's spouse, or a dependent for whom the taxpayer was allowed to

deduct a personal exemption under section 151(c) of the Code for the taxable year. The credit

allowed by this section may not exceed three hundred fifty dollars ($350.00) for each qualified

long-term care insurance contract for which a credit is claimed. The credit allowed under this


the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer. A

nonresident or part-year resident who claims the credit allowed by this subsection shall reduce

the amount of the credit by multiplying it by the fraction calculated under G.S. 105-134.5(b) or

(c), as appropriate.

Filing Status AGI

Married, filing jointly $100,000


Single 60,000


Married, filing separately 50,000

(b) No Double Benefit. – No credit is allowed for payments that are deducted from, or

not included in, the taxpayer's gross income for the taxable year. If the taxpayer claimed a

deduction for health insurance costs of self-employed individuals under section 162(l) of the

Code for the taxable year, the amount of credit otherwise allowed the taxpayer under this section

is reduced by the applicable percentage provided in section 162(l) of the Code. If the taxpayer

claimed a deduction for medical care expenses under section 213 of the Code for the taxable

year, the taxpayer is not allowed a credit under this section. A taxpayer who claims the credit

allowed by this section must provide any information required by the Secretary to demonstrate

that the amount paid for premiums for which the credit is claimed was not excluded from the

taxpayer's gross income for the taxable year.

(c) Definition. – For purposes of this section, the term "qualified long-term care

insurance contract" has the same meaning as defined in section 7702B of the Code.

(d) Sunset. – This section is repealed for taxable years beginning on or after January 1,

2014. (1998-212, s. 29A.6(a); 2007-323, s. 31.5(a); 2012-36, s. 7.)

§ 105-151.29. (Repealed for qualifying expenses occurring on or after January 1, 2015)

Credit for qualifying expenses of a production company.


(1) Highly compensated individual. – An individual who directly or indirectly

receives compensation in excess of one million dollars ($1,000,000) for

personal services with respect to a single production. An individual receives

compensation indirectly when a production company pays a personal service

company or an employee leasing company that pays the individual.

(2) Live sporting event. – A scheduled sporting competition, game, or race that is

not originated by a production company, but originated solely by an amateur,

collegiate, or professional organization, institution, or association for live or

tape-delayed television or satellite broadcast. A live sporting event does not

include commercial advertising, an episodic television series, a television

pilot, a music video, a motion picture, or a documentary production in which

sporting events are presented through archived historical footage or similar

footage taken at least 30 days before it is used.

(3) Production company. – Defined in G.S. 105-164.3.

(4) Qualifying expenses. – The sum of the following amounts spent in this State

by a production company in connection with a production, less the amount

paid in excess of one million dollars ($1,000,000) to a highly compensated

individual:

a. Goods and services leased or purchased. For goods with a purchase

price of twenty-five thousand dollars ($25,000) or more, the amount

included in qualifying expenses is the purchase price less the fair

market value of the good at the time the production is completed.

b. Compensation and wages on which withholding payments are remitted

to the Department of Revenue under Article 4A of this Chapter.

c. The cost of production-related insurance coverage obtained on the

production. Expenses for insurance coverage purchased from a related

member are not qualifying expenses.


d. Employee fringe contributions, including health, pension, and welfare

contributions.

e. Per diems, stipends, and living allowances paid for work being



(b) Credit. – A taxpayer that is a production company and has qualifying expenses of at

least two hundred fifty thousand dollars ($250,000) with respect to a production is allowed a

credit against the taxes imposed by this Part equal to twenty-five percent (25%) of the production

company's qualifying expenses. For the purposes of this section, in the case of an episodic

television series, an entire season of episodes is one production. The credit is computed based on

all of the taxpayer's qualifying expenses incurred with respect to the production, not just the

qualifying expenses incurred during the taxable year.

(b1) Repealed by Session Laws 2009-529, s. 2, effective January 1, 2011.

(c) Pass-Through Entity. – Notwithstanding the provisions of G.S. 105-131.8 and G.S.

105-269.15, a pass-through entity that qualifies for a credit provided in this section does not


for purposes of claiming a credit allowed by this section. If a return filed by a pass-through entity

indicates that the entity is paying tax on behalf of the owners of the entity, a credit allowed under

this section does not affect the entity's payment of tax on behalf of its owners.

(d) Return. – A taxpayer may claim a credit allowed by this section on a return filed for

the taxable year in which the production activities are completed. The return must state the name

of the production, a description of the production, and a detailed accounting of the qualifying

expenses with respect to which a credit is claimed. The qualifying expenses are subject to audit

by the Secretary before the credit is allowed.

(e) Credit Refundable. – If a credit allowed by this section exceeds the amount of tax




In computing the amount of tax against which multiple credits are allowed, nonrefundable credits

are subtracted before refundable credits.

(f) Limitations. – The amount of credit allowed under this section with respect to a

production that is a feature film may not exceed twenty million dollars ($20,000,000). No credit

is allowed under this section for any production that satisfies one of the following conditions:


(2) It is a television production of a news program or live sporting event.

(3) It contains material that is obscene, as defined in G.S. 14-190.1.

(4) It is a radio production.

(g) Substantiation. – A taxpayer allowed a credit under this section must maintain and

make available for inspection any information or records required by the Secretary of Revenue.

The taxpayer has the burden of proving eligibility for a credit and the amount of the credit. The

Secretary may consult with the North Carolina Film Office of the Department of Commerce and

the regional film commissions in order to determine the amount of qualifying expenses.

(h) Report. – The Department must include in the economic incentives report required by


(1) The location of sites used in a production for which a credit was taken.


(2) The qualifying expenses for which a credit was taken, classified by whether

the expenses were for goods, services, or compensation paid by the production

company.

(3) The number of people employed in the State with respect to credits taken.


(i) Repealed by Session Laws 2006-220, s. 4, effective for taxable years beginning on

and after January 1, 2007.

(j) NC Film Office. – To claim a credit under this section, a taxpayer must notify the

Department of Commerce of the taxpayer's intent to claim the production tax credit. The

notification must include the title of the production, the name of the production company, a

financial contact for the production company, the proposed dates on which the production

company plans to begin filming the production, and any other information required by the

Department. For productions that have production credits, a taxpayer claiming a credit under this

section must acknowledge in the production credits both the North Carolina Film Office and the

regional film office responsible for the geographic area in which the filming of the production

occurred.

(k) Sunset. – This section is repealed for qualifying expenses occurring on or after

January 1, 2015. (2005-276, s. 39.1(b); 2005-345, ss. 47(c), 47(d); 2006-162, s. 4(b); 2006-220,

s. 4; 2007-527, s. 24; 2008-107, s. 28.24(b); 2009-445, s. 8(b); 2009-529, s. 2; 2010-147, s. 2.2;

2010-166, s. 1.16; 2012-194, s. 79.10(b); 2015-241, s. 15.4(g).)


recycling oyster shells.

(a) Credit. – A taxpayer who donates oyster shells to the Division of Marine Fisheries of

the Department of Environment and Natural Resources is eligible for a credit against the tax

imposed by this Part. The amount of the credit is equal to one dollar ($1.00) per bushel of oyster

shells donated.

(b) Limitation. – The credit allowed under this section may not exceed the amount of tax


payment made by or on behalf of the taxpayer.

(c) Carryforward. – Any unused portion of a credit allowed in this section may be carried

forward for the succeeding five years.

(d) Documentation of Credit. – Upon request, to support the credit allowed by this

section, the taxpayer must file with its income tax return, for the taxable year in which the credit

is claimed, a certification by the Department of Environment and Natural Resources stating the

number of bushels of oyster shells donated by the taxpayer.

(e) No Double Benefit. – A taxpayer who claims a credit under this section must add

back to adjusted gross income any amount deducted under G.S. 105-134.6(a2) for the donation

of the oyster shells.

(f) Sunset. – This section is repealed effective for taxable years beginning on or after

January 1, 2014. (2006-66, s. 24.18(c); 2007-527, s. 9(b); 2010-147, s. 4.2; 2011-330, s. 36;

2012-36, s. 6(b); 2013-414, s. 5(d).)

§ 105-151.31. (Repealed for taxable years beginning on or after January 1, 2014) Earned

income tax credit.


(a) Credit. – An individual who claims for the taxable year an earned income tax credit

under section 32 of the Code is allowed a credit against the tax imposed by this Part equal to a

percentage of the amount of credit the individual qualified for under section 32 of the Code. A

nonresident or part-year resident who claims the credit allowed by this section must reduce the

amount of the credit by multiplying it by the fraction calculated under G.S. 105-134.5(b) or (c),

as appropriate. The percentage is as follows:

(1) For taxable year 2013, four and one-half percent (4.5%).

(2) For all other taxable years, five percent (5%).

(b) Credit Refundable. – If the credit allowed by this section exceeds the amount of tax




Section 3507 of the Code, Advance Payment of Earned Income Credit, does not apply to the

credit allowed by this section. In computing the amount of tax against which multiple credits are

allowed, nonrefundable credits are subtracted before refundable credits.

(c) Sunset. – This section is repealed effective for taxable years beginning on or after

January 1, 2014. (2007-323, s. 31.4(a); 2008-107, s. 28.9(a); 2012-36, s. 8; 2013-10, s. 9.)


adoption expenses.

(a) Credit. – An individual who is allowed a federal adoption tax credit under section

36C of the Code for the taxable year is allowed a credit against the tax imposed by this Part. The

credit is equal to a percentage of the amount of credit allowed under section 36C of the Code.

The percentage is as follows:

(1) For taxable year 2013, thirty percent (30%).

(2) For all other taxable years, fifty percent (50%).





credits allowed, except payments of tax made by or on behalf of the taxpayer. Any unused

portion of this credit may be carried forward for the next succeeding five years.

(c) Sunset. – This section is repealed effective for taxable years beginning on or after

January 1, 2014. (2007-323, s. 31.6(a); 2012-36, s. 9; 2013-10, s. 10.)


see note) Education expenses credit.

(a) Credit. – A taxpayer is allowed a credit against the tax imposed by this Part for each

of the taxpayer's eligible dependent children who is a resident of this State and who for one or

two semesters during the taxable year is enrolled in grades kindergarten through 12 in a

nonpublic school or in a public school at which tuition is charged in accordance with G.S.

115C-366.1. As used in this section, the term "eligible dependent child" means a child who

meets all of the following criteria:

(1) Is a child with a disability as defined by G.S. 115C-106.3(1).

(2) Was determined to require an individualized education program as defined by

G.S. 115C-106.3(8).


(3) Receives special education or related services on a daily basis.

(4) Is a child for whom the taxpayer is entitled to deduct a personal exemption

under section 151(c) of the Code for the taxable year.

For the initial eligibility for the tax credit, for at least the preceding two semesters, the

eligible dependent child shall have been either (i) enrolled in a public school or (ii) receiving

special education or related services through the public schools as a preschool child with a

disability as defined by G.S. 115C-106.3(17). An eligible dependent child shall be reevaluated

every three years by the local educational agency in order to verify that the child continues to be

a child with a disability as defined by G.S. 115C-106.3(1).

(b) Amount. – The credit is equal to the amount the taxpayer paid for tuition and special

education and related services expenses, not to exceed three thousand dollars ($3,000) per

semester. For home schools, as defined in G.S. 115C-563(a), the credit is equal to the amount the

taxpayer paid for special education and related services expenses, not to exceed three thousand

dollars ($3,000) per semester.

(c) Semesters. – For the purposes of this section, there are two semesters during each

taxable year. The spring semester is the first six months of the taxable year, and the fall semester

is the second six months of the taxable year. An eligible dependent child is enrolled in a school

for a semester if the eligible dependent child is enrolled in that school for more than 70 days

during that semester.

(d) Disqualification. – A taxpayer may not qualify for a credit for any semester during

which the taxpayer's eligible dependent child for whom the credit would otherwise be claimed

met any of the following conditions:

(1) Was placed in a nonpublic school or facility by a public agency at public

expense.

(2) Spent any time enrolled as a full-time student taking at least 12 hours of

academic credit in a postsecondary educational institution.

(3) Was 22 years or older during the entire semester.

(4) Graduated from high school prior to the end of the semester.

(e) Reduction of Credit. – The amount of the credit is reduced for any semester in which

the eligible dependent child spent any time enrolled in a public school. The amount of the

reduction is a percentage equal to the percentage of the semester that the eligible dependent child

spent enrolled in a public school.

(f) Information. – In order to claim the credit allowed by this section, the taxpayer shall

provide, when requested, the following to the Secretary:

(1) The name, address, and social security number of each eligible dependent

child for whom the credit is claimed and the name and address of the school

or schools in which the eligible dependent child was enrolled for more than 70

days each semester.

(2) The taxpayer's certification that the eligible dependent child did not meet any

of the disqualifying conditions set out in this section.

(3) The name of the local school administrative unit in which the eligible

dependent child resides.

(4) The amount of tuition paid to a public school at which tuition is charged in

accordance with G.S. 115C-366.1 for each semester the eligible dependent

child for whom the credit is claimed was enrolled in the school.


(5) The eligibility determination that the eligible dependent child is a child with a

disability who requires special education and related services.

(6) A listing of the tuition and special education and related services expenses on

which the amount of the credit is based.

(7) For home schools as defined in G.S. 115C-563(a), a listing of the special

education and related services expenses on which the amount of the credit is

based.

(g) Carryforward. – The credit allowed under this section may not exceed the amount of

tax imposed by this Part reduced by the sum of all credits allowed against the tax, except

payments of tax made by or on behalf of the taxpayer. Any unused portion of the credit may be

carried forward for the succeeding three years.

(h) Transfer. – At the end of each fiscal year, the Secretary shall transfer to the Fund for

Special Education and Related Services established under G.S. 115C-472.15 from the net

individual income tax collections under G.S. 105-134.2 an amount equal to two thousand dollars

($2,000) multiplied by the number of credits taken under this section during the fiscal year.

(i) Definitions. – The following definitions apply in this section:

(1) "Related services" is as defined in The Individuals with Disabilities Education

Improvement Act, 20 U.S.C. § 1400, et seq., (2004), as amended, and federal

regulations adopted under this act.

(2) "Special education" means specially designed instruction to meet the unique

needs of a child with a disability. The term includes instruction in physical

education and instruction conducted in a classroom, the home, a hospital, or

institution, and other settings. (2011-395, ss. 1, 2; 2013-316, s. 1.1(b);

2013-364, s. 2.)


editor's note) Income tax returns.

(a) Who Must File. – The following individuals shall file with the Secretary an income

tax return under affirmation:

(1) Every resident required to file an income tax return for the taxable year under

the Code and every nonresident who (i) derived gross income from North

Carolina sources during the taxable year attributable to the ownership of any

interest in real or tangible personal property in this State or derived from a

business, trade, profession, or occupation carried on in this State and (ii) is

required to file an income tax return for the taxable year under the Code.

(2) Repealed by Session Laws 1991 (Reg. Sess., 1992), c. 930, s. 1.

(3) Any individual whom the Secretary believes to be liable for a tax under this

Part, when so notified by the Secretary and requested to file a return.

(b) Taxpayer Deceased or Unable to Make Return. – If the taxpayer is unable to file the

income tax return, the return shall be filed by a duly authorized agent or by a guardian or other

person charged with the care of the person or property of the taxpayer. If an individual who was

required to file an income tax return for the taxable year while living has died before making the

return, the administrator or executor of the estate shall file the return in the decedent's name and

behalf, and the tax shall be levied upon and collected from the estate.

(c) Information Required With Return. – The income tax return shall show the adjusted

gross income and adjustments required by this Part and any other information the Secretary


requires. The Secretary may require some or all individuals required to file an income tax return

to attach to the return a copy of their federal income tax return for the taxable year. The

Secretary may require a taxpayer to provide the Department with copies of any other return the

taxpayer has filed with the Internal Revenue Service and to verify any information in the return.

(d) Secretary May Require Additional Information. – When the Secretary has reason to

believe that any taxpayer conducts a trade or business in a way that directly or indirectly distorts

the taxpayer's adjusted gross income or North Carolina taxable income, the Secretary may

require any additional information for the proper computation of the taxpayer's adjusted gross

income and North Carolina taxable income. In computing the taxpayer's adjusted gross income

and North Carolina taxable income, the Secretary shall consider the fair profit that would

normally arise from the conduct of the trade or business.

(e) Joint Returns. – A husband and wife whose federal taxable income is determined on a

joint federal return shall file a single income tax return jointly if each spouse either is a resident

of this State or has North Carolina taxable income and may file a single income tax return jointly

if one spouse is not a resident and has no North Carolina taxable income. Except as otherwise

provided in this Part, a wife and husband filing jointly are treated as one taxpayer for the purpose

of determining the tax imposed by this Part. A husband and wife filing jointly are jointly and

severally liable for the tax imposed by this Part reduced by the sum of all credits allowable

including tax payments made by or on behalf of the husband and wife. However, if a spouse

qualifies for relief of liability for federal tax attributable to a substantial understatement by the

other spouse pursuant to section 6015 of the Code, that spouse is not liable for the corresponding

tax imposed by this Part attributable to the same substantial understatement by the other spouse.

A wife and husband filing jointly have expressly agreed that if the amount of the payments made

by them with respect to the taxes for which they are liable, including withheld and estimated

taxes, exceeds the total of the taxes due, refund of the excess may be made payable to both

spouses jointly or, if either is deceased, to the survivor alone.

(f) Repealed by Session Laws 1991 (Reg. Sess., 1992), c. 930, s. 1. (1939, c. 158, s.

326; 1941, c. 50, s. 5; 1943, c. 400, s. 4; 1945, c. 708, s. 4; 1951, c. 643, s. 4; 1957, c. 1340, s. 4;

1967, c. 1110, s. 3; 1973, c. 476, s. 193; c. 903, s. 1; c. 1287, s. 5; 1977, c. 315; 1989, c. 728, s.

1.23; 1991 (Reg. Sess., 1992), c. 930, s. 1; 1998-98, ss. 69, 104; 1999-337, s. 25; 2006-66, s.

24.11(a); 2012-79, s. 2.5; 2013-316, s. 1.1(a); 2013-414, s. 5(e).)



§ 105-153.1. (Effective for taxable years beginning on or after January 1, 2014) Short title.

This Part of the income tax Article shall be known as the Individual Income Tax Act. (1967,

c. 1110, s. 3; 1989, c. 728, s. 1.1; 1998-98, ss. 44, 68; 2013-316, s. 1.1(a).)

§ 105-153.2. (Effective for taxable years beginning on or before January 1, 2014) Purpose.


the taxable income collectible annually:

(1) Of every resident of this State.

(2) Of every nonresident individual deriving income from North Carolina sources

attributable to the ownership of any interest in real or tangible personal


property in this State, deriving income from a business, trade, profession, or

occupation carried on in this State, or deriving income from gambling

activities in this State. (1939, c. 158, s. 301; 1967, c. 1110, s. 3; 1989, c. 728,

s. 1.2; 1998-98, s. 69; 2005-276, s. 31.1(dd), (jj); 2005-344, s. 10.3; 2006-259,

s. 8(j); 2006-264, s. 91(a); 2013-316, s. 1.1(a).)

§ 105-153.3. (Effective for taxable years beginning on or after January 1, 2014) Definitions.


(1) Adjusted gross income. – Defined in section 62 of the Code.



(4) Educational institution. – An educational institution that normally maintains a

regular faculty and curriculum and normally has a regularly organized body of

students in attendance at the place where its educational activities are carried

on.

(5) Fiscal year. – Defined in section 441(e) of the Code.


(7) Head of household. – Defined in section 2(b) of the Code.

(8) Individual. – A human being.

(9) Limited liability company. – Either a domestic limited liability company

organized under Chapter 57D of the General Statutes or a foreign limited


that is classified for federal income tax purposes as a partnership. As applied

to a limited liability company that is a partnership under this Part, the term

"partner" means a member of the limited liability company.

(10) Married individual. – An individual who is married and is considered married

as provided in section 7703 of the Code.

(11) Nonresident individual. – An individual who is not a resident of this State.

(12) North Carolina taxable income. – Defined in G.S. 105-153.4.

(13) Partnership. – A domestic partnership, a foreign partnership, or a limited

liability company.


(15) Resident. – An individual who is domiciled in this State at any time during the

taxable year or who resides in this State during the taxable year for other than

a temporary or transitory purpose. In the absence of convincing proof to the

contrary, an individual who is present within the State for more than 183 days

during the taxable year is presumed to be a resident, but the absence of an

individual from the state for more than 183 days raises no presumption that

the individual is not a resident. A resident who removes from the State during

a taxable year is considered a resident until he has both established a definite

domicile elsewhere and abandoned any domicile in this State. The fact of

marriage does not raise any presumption as to domicile or residence.



(17a) Surviving spouse. – Defined in section 2(a) of the Code.



(19) Taxpayer. – An individual subject to the tax imposed by this Part.

(20) This State. – The State of North Carolina. (1989, c. 728, s. 1.4; c. 792, s. 1.2;

1989 (Reg. Sess., 1990), c. 814, s. 15; c. 981, s. 5; 1991, c. 689, s. 252; 1991

(Reg. Sess., 1992), c. 922, s. 6; 1993, c. 12, s. 7; c. 354, s. 13; 1996, 2nd Ex.

Sess., c. 13, s. 8.2; 1998-98, ss. 9, 69; 2011-145, s. 31A.1(a); 2011-330, s.

12(a); 2013-157, s. 28; 2013-316, ss. 1.1(a), (c); 2013-414, s. 58(c); 2015-6, s.

2.20(a).)


January 1, 2015) North Carolina taxable income defined.



105-153.5 and G.S. 105-153.6 and G.S. 105-134.6A.



105-153.6 and G.S. 105-134.6A, multiplied by a fraction the denominator of which is the

taxpayer's gross income as modified in G.S. 105-153.5 and G.S. 105-153.6 and G.S. 105-134.6A,

and the numerator of which is the amount of that gross income, as modified, that is derived from

North Carolina sources and is attributable to the ownership of any interest in real or tangible

personal property in this State, is derived from a business, trade, profession, or occupation

carried on in this State, or is derived from gambling activities in this State.




the numerator includes gross income, as modified under G.S. 105-153.5 and G.S. 105-153.6 and

G.S. 105-134.6A, derived from all sources during the period the individual was a resident.



Corporation income that is includable in the numerator is the shareholder's pro rata share of the S

Corporation's income attributable to the State, as defined in G.S. 105-131(b)(4). In order to

calculate the numerator of the fraction provided in subsection (b) of this section for a member of

a partnership or other unincorporated business that has one or more nonresident members and

operates in one or more other states, the amount of the member's distributive share of income of

the business that is includable in the numerator is determined by multiplying the total net income

of the business by the ratio ascertained under the provisions of G.S. 105-130.4. As used in this


taxes, interest, and other deductions allowable under the Code that were incurred in the operation

of the business.



728, s. 1.4; 1995, c. 17, s. 4; 2005-276, s. 31.1(aa); 2005-344, s. 10.4; 2011-145, s. 31A.1(b);

2012-79, s. 1.2; 2013-316, ss. 1.1(a), 1.3(c); 2013-414, s. 55.)

§ 105-153.4. (Effective for taxable years beginning on or after January 1, 2015) North

Carolina taxable income defined.




105-153.5 and G.S. 105-153.6.



105-153.6, multiplied by a fraction the denominator of which is the taxpayer's gross income as

modified in G.S. 105-153.5 and G.S. 105-153.6, and the numerator of which is the amount of

that gross income, as modified, that is derived from North Carolina sources and is attributable to

the ownership of any interest in real or tangible personal property in this State, is derived from a

business, trade, profession, or occupation carried on in this State, or is derived from gambling

activities in this State.




the numerator includes gross income, as modified under G.S. 105-153.5 and G.S. 105-153.6,

derived from all sources during the period the individual was a resident.



Corporation income, as modified in G.S. 105-153.5 and G.S. 105-153.6, that is includable in the

numerator is the shareholder's pro rata share of the S Corporation's income attributable to the

State, as defined in G.S. 105-131(b)(4). In order to calculate the numerator of the fraction

provided in subsection (b) of this section for a member of a partnership or other unincorporated

business that has one or more nonresident members and operates in one or more other states, the

amount of the member's distributive share of the total net income of the business, as modified in

G.S. 105-153.5 and G.S. 105-153.6, that is includable in the numerator is determined in

accordance with the provisions of G.S. 105-130.4. As used in this subsection, total net income

means the entire gross income of the business less all expenses, taxes, interest, and other

deductions allowable under the Code that were incurred in the operation of the business.



728, s. 1.4; 1995, c. 17, s. 4; 2005-276, s. 31.1(aa); 2005-344, s. 10.4; 2011-145, s. 31A.1(b);

2012-79, s. 1.2; 2013-414, s. 55; 2013-316, ss. 1.1(a), 1.3(c); 2015-6, s. 2.22(a).)


Modifications to adjusted gross income.

(a) Deduction Amount. – In calculating North Carolina taxable income, a taxpayer may

deduct from adjusted gross income either the standard deduction amount provided in subdivision

(1) of this subsection or the itemized deduction amount provided in subdivision (2) of this

subsection that the taxpayer claimed under the Code. The deduction amounts are as follows:


before January 1, 2016) Standard deduction amount. – The standard

deduction amount is zero for a person who is not eligible for a standard

deduction under section 63 of the Code. For all other taxpayers, the standard

deduction amount is equal to the amount listed in the table below based on the

taxpayer's filing status:

Filing Status Standard Deduction




Single 7,500


(1) (Effective for taxable years beginning on or after January 1, 2016)

Standard deduction amount. – The standard deduction amount is zero for a

person who is not eligible for a standard deduction under section 63 of the

Code. For all other taxpayers, the standard deduction amount is equal to the

amount listed in the table below based on the taxpayer's filing status:

Filing Status Standard Deduction



Single 7,750



before January 1, 2015) Itemized deduction amount. – An amount equal to

the sum of the items listed in this subdivision. The amounts allowed under this

subdivision are not subject to the overall limitation on itemized deductions

under section 68 of the Code:

a. The amount allowed as a deduction for charitable contributions under

section 170 of the Code for that taxable year. For taxable year 2014, a

taxpayer who elected to take the income exclusion under section

408(d)(8) of the Code for a qualified charitable distribution from an

individual retirement plan by a person who has attained the age of 70

1/2 may deduct the amount that would have been allowed as a

charitable deduction under section 170 of the Code had the taxpayer

not elected to take the income exclusion.

b. The amount allowed as a deduction for interest paid or accrued during

the taxable year under section 163(h) of the Code with respect to any

qualified residence plus the amount claimed by the taxpayer as a

deduction for property taxes paid or accrued on real estate under

section 164 of the Code for that taxable year. For taxable year 2014,

the amount allowed as a deduction for interest paid or accrued during

the taxable year under section 163(h) of the Code with respect to any

qualified residence shall not include the amount for mortgage

insurance premiums treated as qualified residence interest. The amount

allowed under this sub-subdivision may not exceed twenty thousand

dollars ($20,000). For spouses filing as married filing separately or

married filing jointly, the total mortgage interest and real estate taxes

claimed by both spouses combined may not exceed twenty thousand

dollars ($20,000). For spouses filing as married filing separately with a

joint obligation for mortgage interest and real estate taxes, the

deduction for these items is allowable to the spouse who actually paid

them. If the amount of the mortgage interest and real estate taxes paid

by both spouses exceeds twenty thousand dollars ($20,000), these

deductions must be prorated based on the percentage paid by each


spouse. For joint obligations paid from joint accounts, the proration is

based on the income reported by each spouse for that taxable year.


Itemized deduction amount. – An amount equal to the sum of the items listed

in this subdivision. The amounts allowed under this subdivision are not

subject to the overall limitation on itemized deductions under section 68 of the

Code:

a. Charitable Contribution. – The amount allowed as a deduction for

charitable contributions under section 170 of the Code for that taxable

year. For taxable year 2014, a taxpayer who elected to take the income

exclusion under section 408(d)(8) of the Code for a qualified

charitable distribution from an individual retirement plan by a person

who has attained the age of 70 1/2 may deduct the amount that would

have been allowed as a charitable deduction under section 170 of the

Code had the taxpayer not elected to take the income exclusion.

b. Mortgage Expense and Property Tax. – The amount allowed as a

deduction for interest paid or accrued during the taxable year under

section 163(h) of the Code with respect to any qualified residence plus

the amount allowed as a deduction for property taxes paid or accrued

on real estate under section 164 of the Code for that taxable year. For

taxable year 2014, the amount allowed as a deduction for interest paid

or accrued during the taxable year under section 163(h) of the Code

with respect to any qualified residence shall not include the amount for

mortgage insurance premiums treated as qualified residence interest.

The amount allowed under this sub-subdivision may not exceed

twenty thousand dollars ($20,000). For spouses filing as married filing

separately or married filing jointly, the total mortgage interest and real

estate taxes claimed by both spouses combined may not exceed twenty

thousand dollars ($20,000). For spouses filing as married filing

separately with a joint obligation for mortgage interest and real estate

taxes, the deduction for these items is allowable to the spouse who

actually paid them. If the amount of the mortgage interest and real

estate taxes paid by both spouses exceeds twenty thousand dollars

($20,000), these deductions must be prorated based on the percentage

paid by each spouse. For joint obligations paid from joint accounts, the

proration is based on the income reported by each spouse for that

taxable year.

c. Medical and Dental Expense. – The amount allowed as a deduction for

medical and dental expenses under section 213 of the Code for that

taxable year.

(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may

deduct from the taxpayer's adjusted gross income any of the following items that are included in

the taxpayer's adjusted gross income:

(1) Interest upon the obligations of any of the following:

a. The United States or its possessions.


b. This State, a political subdivision of this State, or a commission, an


of this State.

c. A nonprofit educational institution organized or chartered under the

laws of this State.

(2) Gain from the disposition of obligations issued before July 1, 1995, to the

extent the gain is exempt from tax under the laws of this State.

(3) Benefits received under Title II of the Social Security Act and amounts

received from retirement annuities or pensions paid under the provisions of

the Railroad Retirement Act of 1937.

(4) Refunds of State, local, and foreign income taxes included in the taxpayer's

gross income.

(5) The amount received during the taxable year from one or more State, local, or

federal government retirement plans to the extent the amount is exempt from

tax under this Part pursuant to a court order in settlement of any of the

following cases:

a. Bailey v. State, 92 CVS 10221, 94 CVS 6904, 95 CVS 6625, 95 CVS

8230.

b. Emory v. State, 98 CVS 0738.

c. Patton v. State, 95 CVS 04346.

(6) Income that meets both of the following requirements:

a. Is earned or received by an enrolled member of a federally recognized

Indian tribe.

b. Is derived from activities on a federally recognized Indian reservation

while the member resides on the reservation. Income from intangibles

having a situs on the reservation and retirement income associated

with activities on the reservation are considered income derived from

activities on the reservation.

(7) The amount by which the basis of property under this Article exceeds the

basis of the property under the Code, in the year the taxpayer disposes of the

property.

(8) The amount allowed as a deduction under G.S. 105-153.6 as a result of an



amount paid to the taxpayer during the taxable year from the Eugenics

Sterilization Compensation Fund as compensation to a qualified recipient

under the Eugenics Asexualization and Sterilization Compensation Program

under Part 30 of Article 9 of Chapter 143B of the General Statutes. This

subdivision expires for taxable years beginning on or after January 1, 2016.

(c) Additions. – In calculating North Carolina taxable income, a taxpayer must add to the

taxpayer's adjusted gross income any of the following items that are not included in the

taxpayer's adjusted gross income:

(1) Interest upon the obligations of states other than this State, political

subdivisions of those states, and agencies of those states and their political

subdivisions.


(2) The amount by which a shareholder's share of S Corporation income is

reduced under section 1366(f)(2) of the Code for the taxable year by the

amount of built-in gains tax imposed on the S Corporation under section 1374

of the Code.

(3) The amount by which the basis of property under the Code exceeds the basis

of the property under this Article, in the year the taxpayer disposes of the

property.


(5) The amount required to be added under G.S. 105-153.6 when the State


(c1) (Effective for taxable years beginning on or after January 1, 2015) Other

Additions. – S Corporations subject to the provisions of Part 1A of this Article, partnerships

subject to the provisions of this Part, and estates and trusts subject to the provisions of Part 3 of

this Article must add any amount deducted under section 164 of the Code as state, local, or

foreign income tax.

(c2) Decoupling Adjustments. – In calculating North Carolina taxable income, a taxpayer

must add to the taxpayer's adjusted gross income any of the following items that are not included

in the taxpayer's adjusted gross income:


for the discharge of qualified principal residence indebtedness under section

108 of the Code. The purpose of this subdivision is to decouple from the

extension of the income exclusion under section 102 of the Tax Increase

Prevention Act of 2014.

(2) For taxable year 2014, the amount of the taxpayer's deduction for qualified

tuition and related expenses under section 222 of the Code. The purpose of

this subdivision is to decouple from the extension of the federal above-the-line

deduction under section 107 of the Tax Increase Prevention Act of 2014.


for a qualified charitable distribution from an individual retirement plan by a

person who has attained age 70 1/2 under section 408(d)(8) of the Code. The

purpose of this subdivision is to decouple from the extension of the income

exclusion under section 108 of the Tax Increase Prevention Act of 2014.

(d) S Corporations. – Each shareholder's pro rata share of an S Corporation's income is

subject to the adjustments provided in this section and in G.S. 105-153.6. (2013-316, s. 1.1(d);

2013-360, s. 6.18(b); 2014-3, s. 2.2(a); 2015-2, s. 1.3; 2015-6, ss. 2.20(b), 2.22(b); 2015-241, ss.

32.16(a), (b).)

§ 105-153.6. Adjustments when State decouples from federal accelerated depreciation and

expensing.


depreciation deduction for that property under section 168(k) or 168(n) of the Code must add to

the taxpayer's federal taxable income or adjusted gross income, as appropriate, eighty-five

percent (85%) of the amount taken for that year under those Code provisions. For taxable years

before 2012, the taxpayer must add the amount to the taxpayer's federal taxable income. For

taxable year 2012 and after, the taxpayer must add the amount to the taxpayer's adjusted gross

income. A taxpayer is allowed to deduct twenty percent (20%) of the add-back in each of the


first five taxable years following the year the taxpayer is required to include the add-back in

income.







2010.




below must add to the taxpayer's federal taxable income or adjusted gross income, as

appropriate, eighty-five percent (85%) of the amount by which the taxpayer's expense deduction

under section 179 of the Code exceeds the dollar and investment limitation listed in the table

below for that taxable year. For taxable years before 2012, the taxpayer must add the amount to

the taxpayer's federal taxable income. For taxable year 2012 and after, the taxpayer must add the

amount to the taxpayer's adjusted gross income.




85% Add-Back

2010 $250,000 $800,000

2011 $250,000 $800,000

2012 $250,000 $800,000

2013 $25,000 $200,000

2014 $25,000 $200,000









provisions of subsection (a) of this section, the transferor and any owner in a transferor are not

allowed any remaining future bonus depreciation deductions associated with the transferred

asset. This subsection applies only to the extent that each transferor or owner in a transferor that

added bonus depreciation to its federal taxable income or adjusted gross income associated with

the transferred asset certifies in writing to the transferee, that the transferor or owner in a

transferor will not take any remaining future bonus depreciation deduction associated with the

transferred asset.








met:

(1) The transferor or any owner in a transferor has not taken the bonus

depreciation deduction on a prior return.

(2) The transferor is not allowed any remaining future bonus depreciation

deductions associated with the transferred asset and each transferor or owner

in a transferor certifies in writing to the transferee that the transferor or owner

in a transferor will not take any remaining deductions allowed under

subsection (a) of this section for tax years beginning on or after January 1,

2013, for depreciation associated with the transferred asset.

(3) The amount of the basis adjustment under this subsection is limited to the total

remaining future bonus depreciation deductions forfeited by the transferor and

any owner in the transferor at the time of the transfer.

(g) Tax Basis. – For transactions described in subsection (e) or (f) of this section,

adjusted gross income must be increased or decreased to account for any difference in the

amount of depreciation, amortization, or gains or losses applicable to property that has been

depreciated or amortized by use of a different basis or rate for State income tax purposes than

used for federal income tax purposes.


(1) Owner in a transferor. – One or more of the following of a transferor:

a. A partner, shareholder, or member.

b. A beneficiary subject to tax under Part 2 or 3 of Article 4 of this

Chapter of a transferor.

(2) Transferor. – An individual, partnership, corporation, S Corporation, limited

liability company, or an estate or trust that does not fully distribute income to

its beneficiaries. (2013-316, s. 1.1(d); 2013-414, s. 58(a); 2014-3, s. 2.1(c);

2015-2, s. 1.2(b); 2015-6, s. 2.8(b).)

§ 105-153.7. (Effective for taxable years beginning on or after January 1, 2014) Individual

income tax imposed.

(a) (Effective for taxable years beginning on or after January 1, 2014 and before

January 1, 2015) Tax. – A tax is imposed for each taxable year on the North Carolina taxable

income of every individual. The tax shall be levied, collected, and paid annually. The tax is five

and eight-tenths percent (5.8%) of the taxpayer's North Carolina taxable income.

(a) (Effective for taxable years beginning on or after January 1, 2015 and before

January 1, 2017) Tax. – A tax is imposed for each taxable year on the North Carolina taxable

income of every individual. The tax shall be levied, collected, and paid annually. The tax is five

and seventy-five hundredths percent (5.75%) of the taxpayer's North Carolina taxable income.

(a) (Effective for taxable years beginning on or after January 1, 2017) Tax. – A tax is

imposed for each taxable year on the North Carolina taxable income of every individual. The tax

shall be levied, collected, and paid annually. The tax is five and four hundred ninety-nine

thousandths percent (5.499%) of the taxpayer's North Carolina taxable income.

(b) Withholding Tables. – The Secretary may provide tables that compute the amount of

tax due for a taxable year under this Part. The tables do not apply to an individual who files a

return under section 443(a)(1) of the Code for a period of less than 12 months due to a change in


the individual's annual accounting period or to an estate or trust. (2013-316, s. 1.1(d); 2013-316,

s. 1.2(a); 2015-241, s. 32.16(c).)

§ 105-153.8. (Effective for taxable years beginning on or after January 1, 2014) Income tax

returns.

(a) Who Must File. – The following individuals must file with the Secretary an income

tax return under affirmation:

(1) Every resident required to file an income tax return for the taxable year under

the Code.

(2) Every nonresident individual who meets all of the following requirements:

a. Receives during the taxable year gross income that is derived from

North Carolina sources and is attributable to the ownership of any

interest in real or tangible personal property in this State, is derived

from a business, trade, profession, or occupation carried on in this

State, or is derived from gambling activities in this State.

b. Is required to file an income tax return for the taxable year under the

Code.

(3) Any individual whom the Secretary believes to be liable for a tax under this

Part, when so notified by the Secretary and requested to file a return.

(b) Taxpayer Deceased or Unable to Make Return. – If a taxpayer is unable to file an

income tax return, a duly authorized agent of the taxpayer or a guardian or other person charged

with the care of the person or property of the taxpayer must file the return. If an individual who

was required to file an income tax return for the taxable year while living has died before making

the return, the administrator or executor of the estate must file the return in the decedent's name

and behalf, and the tax is payable by the estate.

(c) Information Required With Return. – The income tax return must show the adjusted

gross income and modifications required by this Part, and any other information the Secretary

requires. The Secretary may require some or all individuals required to file an income tax return

to attach to the return a copy of their federal income tax return for the taxable year. The

Secretary may require a taxpayer to provide the Department with copies of any other return the

taxpayer has filed with the Internal Revenue Service and to verify any information in the return.

(d) Secretary May Require Additional Information. – When the Secretary has reason to

believe that any taxpayer conducts a trade or business in a way that directly or indirectly distorts

the taxpayer's adjusted gross income or North Carolina taxable income, the Secretary may

require any additional information for the proper computation of the taxpayer's adjusted gross

income and North Carolina taxable income. In computing the taxpayer's adjusted gross income

and North Carolina taxable income, the Secretary must consider the fair profit that would

normally arise from the conduct of the trade or business.

(e) Joint Returns. – A husband and wife whose adjusted gross income is determined on a

joint federal return must file a single income tax return jointly if each spouse either is a resident

of this State or has North Carolina taxable income and may file a single income tax return jointly

if one spouse is not a resident and has no North Carolina taxable income. Except as otherwise

provided in this Part, a wife and husband filing jointly are treated as one taxpayer for the purpose

of determining the tax imposed by this Part. A husband and wife filing jointly are jointly and

severally liable for the tax imposed by this Part reduced by the sum of all credits allowable

including tax payments made by or on behalf of the husband and wife. However, if a spouse


qualifies for relief of liability for federal tax attributable to a substantial understatement by the

other spouse pursuant to section 6015 of the Code, that spouse is not liable for the corresponding

tax imposed by this Part attributable to the same substantial understatement by the other spouse.

A wife and husband filing jointly have expressly agreed that if the amount of the payments made

by them with respect to the taxes for which they are liable, including withheld and estimated

taxes, exceeds the total of the taxes due, refund of the excess may be made payable to both

spouses jointly or, if either is deceased, to the survivor alone. (1939, c. 158, s. 326; 1941, c. 50,

s. 5; 1943, c. 400, s. 4; 1945, c. 708, s. 4; 1951, c. 643, s. 4; 1957, c. 1340, s. 4; 1967, c. 1110, s.

3; 1973, c. 476, s. 193; c. 903, s. 1; c. 1287, s. 5; 1977, c. 315; 1989, c. 728, s. 1.23; 1991 (Reg.

Sess., 1992), c. 930, s. 1; 1998-98, ss. 69, 104; 1999-337, s. 25; 2006-66, s. 24.11(a); 2012-79, s.

2.5; 2013-316, ss. 1.1(a), 1.3(d).)

§ 105-153.9. (Effective for taxable years beginning on or after January 1, 2014) Tax credits

for income taxes paid to other states by individuals.

(a) An individual who is a resident of this State is allowed a credit against the taxes

imposed by this Part for income taxes imposed by and paid to another state or country on income

taxed under this Part, subject to the following conditions:

(1) The credit is allowed only for taxes paid to another state or country on income

that is derived from sources within that state or country and is taxed under its

laws irrespective of the residence or domicile of the recipient, except that

whenever a taxpayer who is considered a resident of this State under this Part

is considered a resident of another state or country under the laws of that state

or country, the Secretary may allow a credit against the taxes imposed by this

Part for taxes imposed by and paid to the other state or country on income

taxed under this Part.

(2) The fraction of the gross income, as modified as provided in G.S. 105-134.6A,

G.S. 105-153.5, and G.S. 105-153.6, that is subject to income tax in another

state or country shall be ascertained, and the North Carolina net income tax

before credit under this section shall be multiplied by that fraction. The credit

allowed is either the product thus calculated or the income tax actually paid

the other state or country, whichever is smaller.

(3) Receipts showing the payment of income taxes to another state or country and

a true copy of a return or returns upon the basis of which the taxes are

assessed shall be filed with the Secretary when the credit is claimed. If credit

is claimed on account of a deficiency assessment, a true copy of the notice

assessing or proposing to assess the deficiency, as well as a receipt showing

the payment of the deficiency, shall be filed.

(b) If any taxes paid to another state or country for which a taxpayer has been allowed a

credit under this section are at any time credited or refunded to the taxpayer, a tax equal to that

portion of the credit allowed for the taxes so credited or refunded is due and payable from the

taxpayer and is subject to the penalties and interest provided in Subchapter I of this Chapter.

(1939, c. 158, s. 325; 1941, c. 50, s. 5; c. 204, s. 1; 1943, c. 400, s. 4; 1957, c. 1340, s. 4; 1963, c.

1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1989, c. 728, s. 1.5; 1989 (Reg. Sess., 1990),

c. 814, s. 17; 1998-98, s. 92; 2013-316, ss. 1.1(a), 1.3(d); 2013-414, s. 5(b).)


§ 105-153.10. (Effective for taxable years beginning on or after January 1, 2014) Credit for

children.

(a) Credit. – A taxpayer who is allowed a federal child tax credit under section 24 of the

Code for the taxable year is allowed a credit against the tax imposed by this Part for each

dependent child for whom the taxpayer is allowed the federal credit. The amount of credit

allowed under this section for the taxable year is equal to the amount listed in the table below

based on the taxpayer's adjusted gross income, as calculated under the Code: Filing Status AGI Credit Amount Married, filing jointly Up to $40,000 $125.00 Over $40,000 Up to $100,000 $100.00 Over $100,000 0 Head of Household Up to $32,000 $125.00 Over $32,000 Up to $80,000 $100.00 Over $80,000 0 Single Up to $20,000 $125.00 Over $20,000 Up to $50,000 $100.00 Over $50,000 0 Married, filing separately Up to $20,000 $125.00 Over $20,000 Up to $50,000 $100.00 Over $50,000 0.





credits allowed, except payments of tax made by or on behalf of the taxpayer. (1995, c. 42, s. 3;

1998-98, s. 69; 2001-424, s. 34.20(a); 2002-126, s. 30B.2(a), (b); 2003-284, s. 39B.2; 2013-316,

s. 1.1(a), (e).)

§ 105-154. Information at the source returns.

(a) Repealed by Session Laws 1993, c. 354, s. 14.

(b) Information Returns of Payers. – A person who is a resident of this State, has a place

of business in this State, or has an employee, an agent, or another representative in any capacity

in this State shall file an information return as required by the Secretary if the person directly or

indirectly pays or controls the payment of any income to any taxpayer. The return shall contain

all information required by the Secretary. The filing of any return in compliance with this section

by a foreign corporation is not evidence that the corporation is doing business in this State.

(c) Information Returns of Partnerships. – A partnership doing business in this State and

required to file a return under the Code shall file an information return with the Secretary. A

partnership that the Secretary believes to be doing business in this State and to be required to file

a return under the Code shall file an information return when requested to do so by the Secretary.

The information return shall contain all information required by the Secretary. It shall state

specifically the items of the partnership's gross income, the deductions allowed under the Code,


and the adjustments required by this Part. The information return shall also include the name and

address of each person who would be entitled to share in the partnership's net income, if

distributable, and the amount each person's distributive share would be. The information return

shall specify the part of each person's distributive share of the net income that represents

corporation dividends. The information return shall be signed by one of the partners under

affirmation in the form required by the Secretary.

A partnership that files an information return under this subsection shall furnish to each

person who would be entitled to share in the partnership's net income, if distributable, any

information necessary for that person to properly file a State income tax return. The information

shall be in the form prescribed by the Secretary and must be furnished on or before the due date

of the information return.

(d) (Effective for taxable years beginning before January 1, 2014) Payment of Tax on

Behalf of Nonresident Owner or Partner. – If a business conducted in this State is owned by a

nonresident individual or by a partnership having one or more nonresident members, the

manager of the business shall report the earnings of the business in this State, the distributive

share of the income of each nonresident owner or partner, and any other information required by

the Secretary. The manager of the business shall pay with the return the tax on each nonresident

owner or partner's share of the income computed at the rate levied on individuals under G.S.

105-134.2(a)(3). The business may deduct the payment for each nonresident owner or partner

from the owner or partner's distributive share of the profits of the business in this State. If the

nonresident partner is not an individual and the partner has executed an affirmation that the

partner will pay the tax with its corporate, partnership, trust, or estate income tax return, the

manager of the business is not required to pay the tax on the partner's share. In this case, the

manager shall include a copy of the affirmation with the report required by this subsection.

(d) (Effective for taxable years beginning on or after January 1, 2014) Payment of

Tax on Behalf of Nonresident Owner or Partner. – If a business conducted in this State is owned

by a nonresident individual or by a partnership having one or more nonresident members, the

manager of the business shall report the earnings of the business in this State, the distributive

share of the income of each nonresident owner or partner, and any other information required by

the Secretary. The manager of the business shall pay with the return the tax on each nonresident

owner or partner's share of the income computed at the rate levied on individuals under G.S.

105-153.7. The business may deduct the payment for each nonresident owner or partner from the

owner or partner's distributive share of the profits of the business in this State. If the nonresident

partner is not an individual and the partner has executed an affirmation that the partner will pay

the tax with its corporate, partnership, trust, or estate income tax return, the manager of the

business is not required to pay the tax on the partner's share. In this case, the manager shall

include a copy of the affirmation with the report required by this subsection.

(e) Publicly Traded Partnership. – The information return and payment requirements

under this section are modified as follows for a publicly traded partnership that is described in

section 7704(c) of the Code:

(1) The information return required under subsection (c) of this section is limited

to partners whose distributive share of the partnership's net income during the

tax year was more than five hundred dollars ($500.00).

(2) The payment requirements under subsection (d) of this section do not apply.

(1939, c. 158, s. 328; 1945, c. 708, s. 4; 1957, c. 1340, s. 4; 1967, c. 1110, s.

3; 1973, c. 476, s. 193; c. 1287, s. 5; 1989, c. 728, s. 1.25; 1989 (Reg. Sess.,


1990), c. 814, s. 19; 1991 (Reg. Sess., 1992), c. 930, s. 2; 1993, c. 314, s. 1; c.

354, s. 14; 1998-98, s. 69; 1999-337, s. 26; 2008-107, s. 28.8(a); 2013-316, s.

1.3(e).)

§ 105-155. Time and place of filing returns; extensions; affirmation.

(a) Return. – An income tax return shall be filed at the place and in the form prescribed

by the Secretary. The income tax return of every taxpayer reporting on a calendar year basis is

due on or before the fifteenth day of April in each year. The income tax return of every taxpayer

reporting on a fiscal year basis is due on or before the fifteenth day of the fourth month following

the close of the fiscal year. These dates do not apply to a nonresident alien whose federal income

tax return is due at a later date under section 6072(c) of the Code. The return of a nonresident

alien affected by that Code section is due on or before the fifteenth day of the sixth month

following the close of the taxable year. An information return shall be filed at the times

prescribed by the Secretary. A taxpayer may ask the Secretary for an extension of time to file a

return under G.S. 105-263.

(b) Repealed by 1991 (Regular Session, 1992), c. 930, s. 3.

(c) Repealed by Session Laws 1998-217, s. 44, effective October 31, 1998.

(d) Forms. – Returns and affirmations shall be in the form prescribed by the Secretary.

(1939, c. 158, s. 329; 1943, c. 400, s. 4; 1951, c. 643, s. 4; 1953, c. 1302, s. 4; 1955, c. 17, s. 1;

1957, c. 1340, s. 4; 1963, c. 1169, s. 2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1989, c. 728, s.

1.26; 1989 (Reg. Sess., 1990), c. 984, s. 10; 1991, c. 45, s. 12; 1991 (Reg. Sess., 1992), c. 930, s.

3; 1998-217, s. 44; 2006-18, s. 8.)

§ 105-156: Repealed by Session Laws 2009-445, s. 7, effective August 7, 2009.


§ 105-157. When tax must be paid.

(a) Except as otherwise provided in this section and in Article 4A of this Chapter, the full

amount of the tax payable as shown on the return must be paid to the Secretary within the time

allowed for filing the return. If the amount shown to be due is less than one dollar ($1.00), no

payment need be made.

(b) Repealed by Session Laws 1993, c. 450, s. 4. (1939, c. 158, s. 332; 1943, c. 400, s. 4;

1947, c. 501, s. 4; 1951, c. 643, s. 4; 1955, c. 17, s. 2; 1959, c. 1259, s. 2; 1963, c. 1169, s. 2;

1967, c. 702, s. 1; c. 1110, s. 3; 1973, c. 476, s. 193; c. 903, s. 2; c. 1287, s. 5; 1989, c. 728, s.

1.29; 1989 (Reg. Sess., 1990), c. 984, s. 11; 1991 (Reg. Sess., 1992), c. 930, s. 4; 1993, c. 450, s.

4.)

§ 105-158. Taxation of certain Armed Forces personnel and other individuals upon death.

An individual is not subject to the tax imposed by this Part for a taxable year if, under section

692 of the Code, the individual is not subject to federal income tax for that same taxable year.

(1969, c. 1116; 1979, c. 179, s. 2; 1989, c. 728, s. 1.30; 1991, c. 439, s. 2; 1998-98, s. 69;

2011-183, s. 72.)

§ 105-159. Federal corrections.


If a taxpayer's adjusted gross income or federal tax credit that affects the amount of State tax

payable is corrected or otherwise determined by the federal government, the taxpayer must,

within six months after being notified of the correction or final determination by the federal

government, file an income tax return with the Secretary reflecting the corrected or determined

adjusted gross income or federal tax credit that affects the amount of State tax payable. The

Secretary must propose an assessment for any additional tax due from the taxpayer as provided

in Article 9 of this Chapter. The Secretary must refund any overpayment of tax as provided in

Article 9 of this Chapter. A taxpayer who fails to comply with this section is subject to the

penalties in G.S. 105-236 and forfeits the right to any refund due by reason of the determination.

(1939, c. 158, s. 334; 1947, c. 501, s. 4; 1949, c. 392, s. 3; 1957, c. 1340, s. 14; 1963, c. 1169, s.

2; 1967, c. 1110, s. 3; 1973, c. 476, s. 193; 1989, c. 728, s. 1.31; 1993 (Reg. Sess., 1994), c. 582,

s. 1; 2006-18, s. 5; 2007-491, s. 16; 2013-414, s. 38.)

§ 105-159.1: Repealed by Session Law 2013-38.1(e), effective July 1, 2013.

§ 105-159.2: Repealed by Session Laws 2013-360, s. 21.1(c), as amended by Session Laws

2014-3, s. 14.15, and Session Laws 2013-381, s. 38.1(f), effective July 1, 2013.

Part 3. Income Tax – Estates, Trusts, and Beneficiaries.


This Part shall be known as the Income Tax Act for Estates, Trusts, and Beneficiaries. (1967,

c. 1110, s. 3; 1989, c. 728, s. 1.36; 1998-98, ss. 45, 68.)


The definitions provided in Part 2 of this Article shall apply in this Part except where the

context clearly indicates a different meaning. In addition, as used in this Part, "taxable income" is

defined in sections 641 through 692 of the Code. (1989, c. 728, s. 1.38; 1998-98, ss. 69, 71;

2013-414, s. 5(f).)

§ 105-160.2. (Effective for taxable years beginning on or after January 1, 2014) Imposition

of tax.

The tax imposed by this Part applies to the taxable income of estates and trusts as determined

under the provisions of the Code except as otherwise provided in this Part. The taxable income

of an estate or trust is the same as taxable income for such an estate or trust under the provisions

of the Code, adjusted as provided in G.S. 105-153.5 and G.S. 105-153.6, except that the

adjustments provided in G.S. 105-153.5 and G.S. 105-153.6 are apportioned between the estate

or trust and the beneficiaries based on the distributions made during the taxable year. The tax is

computed on the amount of the taxable income of the estate or trust that is for the benefit of a

resident of this State, or for the benefit of a nonresident to the extent that the income (i) is

derived from North Carolina sources and is attributable to the ownership of any interest in real or

tangible personal property in this State or (ii) is derived from a business, trade, profession, or

occupation carried on in this State. For purposes of the preceding sentence, taxable income and

gross income is computed subject to the adjustments provided in G.S. 105-153.5 and G.S.

105-153.6. The tax on the amount computed above is at the rates levied in G.S. 105-153.7. The

fiduciary responsible for administering the estate or trust shall pay the tax computed under the


provisions of this Part. (1989, c. 728, s. 1.38; 1989 (Reg. Sess., 1990), c. 814, s. 21; 1991, c.

689, s. 302; 1998-98, s. 69; 2013-414, s. 5(g); 2014-3, s. 2.3(a).)

§ 105-160.3. Tax credits.

(a) Except as otherwise provided in this section, the credits allowed to an individual

against the tax imposed by Part 2 of this Article shall be allowed to the same extent to an estate

or a trust against the tax imposed by this Part. Any credit computed as a percentage of income

received shall be apportioned between the estate or trust and the beneficiaries based on the

distributions made during the taxable year. No credit may exceed the amount of the tax imposed

by this Part for the taxable year reduced by the sum of all credits allowable, except for payments

of tax made by or on behalf of the estate or trust.

(b) (Effective for taxable years beginning before January 1, 2014) The following

credits are not allowed to an estate or trust:

(1) G.S. 105-151. Tax credits for income taxes paid to other states by individuals.

(2) G.S. 105-151.11. Credit for child care and certain employment-related

expenses.

(3) G.S. 105-151.18. Credit for the disabled.

(4) G.S. 105-151.24. Credit for children.

(5) G.S. 105-151.26. Credit for charitable contributions by nonitemizers.


(7) G.S. 105-151.28. Credit for long-term care insurance.

(8) (Expires for taxable years beginning on or after January 1, 2013) G.S.

105-151.30. Credit for recycling oyster shells.

(9) G.S. 105-151.31. Earned income tax credit.

(10) G.S. 105-151.32. Credit for adoption expenses.

(11) G.S. 105-151.33. Education expenses credit.

(b) (Effective for taxable years beginning on or after January 1, 2014) The tax credits

allowed under G.S. 105-153.9 and G.S. 105-153.10 may not be claimed by an estate or trust.

(1989, c. 728, s. 1.38; 1998-1, s. 5(b); 1998-98, ss. 10, 105; 1998-212, s. 29A.6(b); 2004-170, s.

17; 2006-66, s. 24.18(f); 2007-323, ss. 31.4(b), 31.5(b), 31.6(b); 2011-330, s. 36; 2012-79, s. 2.6;

2013-316, s. 1.3(f); 2013-364, s. 3.)

§ 105-160.4. Tax credits for income taxes paid to other states by estates and trusts.

(a) If a fiduciary is required to pay income tax to this State for an estate or a trust, the

fiduciary shall be allowed a credit against the tax imposed by this Part for income taxes imposed

by and paid to another state or country on income derived from sources within that other state or

country in accordance with the formula contained in subsection (b) and the requirements of

subsection (c).

(b) The fraction of the gross income for North Carolina income tax purposes that is

derived from sources within and subject to income tax in another state or country shall be

ascertained and the North Carolina income tax before credit under this section shall be multiplied

by that fraction. The credit allowed shall be either the product thus calculated or the income tax

actually paid the other state or country, whichever is smaller.

(c) Receipts showing the payment of income taxes to another state or country and a true

copy of the return upon the basis of which the taxes are assessed shall be filed with the Secretary

at or before the time credit is claimed. If credit is claimed on account of a deficiency assessment,


a true copy of the notice assessing or proposing to assess the deficiency, as well as a receipt

showing the payment of the deficiency, shall be filed with the Secretary.

(d) If any taxes paid to another state or country for which a fiduciary has been allowed a

credit under this section are at any time credited or refunded to the fiduciary, a tax equal to that

portion of the credit allowed for the taxes so credited or refunded shall be due and payable from

the fiduciary and shall be subject to the penalties and interest on delinquent payments provided

in G.S. 105-236 and G.S. 105-241.21.

(e) A resident beneficiary of an estate or trust who is taxed under the provisions of Part 2

of this Article on income from an estate or trust determined to be includable in the resident's

gross income is allowed a credit against the tax imposed for income taxes paid by the fiduciary

to another state or country on the income in accordance with the formula contained in subsection

(b) of this section and the requirements of subsection (c) of this section; provided, that if any

taxes paid to another state or country for which a beneficiary has been allowed credit under this

section are at any time credited or refunded to the beneficiary, a tax equal to that portion of the

credit allowed for the taxes so credited or refunded shall be due and payable from the beneficiary

and shall be subject to the penalties and interest on delinquent payments provided in G.S.

105-236 and G.S. 105-241.21. (1989, c. 728, s. 1.38; 1998-98, ss. 69, 71; 2007-491, s. 44(1)b.)

§ 105-160.5. Returns.

The fiduciary of an estate or trust described below shall file an income tax return under

affirmation, showing specifically the taxable income and the adjustments required by this Part

and such other facts as the Secretary may require for the purpose of making any computation

required by this Part:

(1) Every estate or trust which has taxable income under this Part during the

taxable year and is required to file an income tax return for the taxable year

under the Code.

(2) Every estate or trust which the Secretary believes to be liable for a tax under

this Part, when so notified by the Secretary and requested to file a return.

(1989, c. 728, s. 1.38; 1998-98, s. 69.)

§ 105-160.6. Time and place of filing returns.

An income tax return of an estate or a trust shall be filed as prescribed by the Secretary at the

place prescribed by the Secretary. The return of every fiduciary reporting on a calendar year

basis shall be filed on or before the 15th day of April in each year, and the return of every

fiduciary reporting on a fiscal year basis shall be filed on or before the 15th day of the fourth

month following the close of the fiscal year. A fiduciary may ask the Secretary for an extension

of time to file a return under G.S. 105-263. (1989, c. 728, s. 1.38; 1989 (Reg. Sess., 1990), c.

984, s. 12; 1991 (Reg. Sess., 1992), c. 930, s. 7.)

§ 105-160.7. When tax must be paid.

(a) The full amount of the tax payable as shown on the return must be paid to the

Secretary within the time allowed for filing the return. However, if the amount shown to be due

after all credits is less than one dollar ($1.00), no payment need be made.

(b) Repealed by Session Laws 1993, c. 450, s. 5. (1989, c. 728, s. 1.38; 1989 (Reg. Sess.,

1990), c. 984, s. 13; 1991 (Reg. Sess., 1992), c. 930, s. 8; 1993, c. 450, s. 5.)


§ 105-160.8. Federal corrections.

For purposes of this Part, the provisions of G.S. 105-159 requiring an individual to report the

correction or determination of taxable income by the federal government apply to fiduciaries

required to file returns for estates and trusts. (1989, c. 728, s. 1.38; 1993 (Reg. Sess., 1994), c.

582, s. 3; 1998-98, s. 69.)

§§ 105-161 through 105-163: Repealed by Session Laws 1989, c. 728, s. 1.37.

§§ 105-163.01 through 105-163.06: Repealed by Session Laws 1991, c. 45, s. 14(b).

§ 105-163.07: Recodified as § 105-151.21 by Session Laws 1991, c. 45, s. 14.

§§ 105-163.08 through 105-163.09: Repealed by Session Laws 1991, c. 45, s. 14(b).

Part 5. Tax Credits for Qualified Business Investments.

§ 105-163.010. (Repealed effective for investments made on or after January 1, 2014)

Definitions.


(1) Affiliate. – An individual or business that controls, is controlled by, or is

under common control with another individual or business.

(2) Business. – A corporation, partnership, limited liability company, association,

or sole proprietorship operated for profit.

(3) Control. – A person controls an entity if the person owns, directly or

indirectly, more than ten percent (10%) of the voting securities of that entity.

As used in this subdivision, the term "voting security" means a security that (i)

confers upon the holder the right to vote for the election of members of the

board of directors or similar governing body of the business or (ii) is

convertible into, or entitles the holder to receive upon its exercise, a security

that confers such a right to vote. A general partnership interest is a voting

security.

(4) Equity security. – Common stock, preferred stock, or an interest in a

partnership, or subordinated debt that is convertible into, or entitles the holder

to receive upon its exercise, common stock, preferred stock, or an interest in a

partnership.

(5) Financial institution. – A business that is (i) a bank holding company, as

defined in the Bank Holding Company Act of 1956, 12 U.S.C. §§ 1841, et

seq., or its wholly owned subsidiary, (ii) registered as a broker-dealer under

the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a, et seq., or its wholly

owned subsidiary, (iii) an investment company as defined in the Investment

Company Act of 1940, 15 U.S.C. §§ 80a-1, et seq., whether or not it is

required to register under that act, (iv) a small business investment company

as defined in the Small Business Investment Act of 1958, 15 U.S.C. §§ 661, et

seq., (v) a pension or profit-sharing fund or trust, or (vi) a bank, savings

institution, trust company, financial services company, or insurance company.

The term does not include, however, a business, other than a small business

investment company, whose net worth, when added to the net worth of all of


its affiliates, is less than ten million dollars ($10,000,000). The term also does

not include a business that does not generally market its services to the public

and is controlled by a business that is not a financial institution.

(5a) Granting entity. – Any of the following:

a. A domestic or foreign corporation that (i) is tax-exempt pursuant to

section 501(c)(3) of the Code, (ii) has as its principal purpose the

stimulation of the development of the biotechnology industry, and (iii)

in furtherance of that purpose has received, or is a successor in interest

to an organization that has received, direct appropriations from the

State in at least three fiscal years.

b. A domestic or foreign corporation that meets the following three

conditions:

1. It is tax-exempt pursuant to section 501(c)(3) of the Code, is a

private foundation pursuant to section 509 of the Code, or is an

affiliate of either of the foregoing.

2. It has as its principal purpose one of the following: conducting

research and development in, or stimulating the development

of, electronic, photonic, information, or other technologies,

which may include investing in companies that provide

research, development, products, or services in these

technologies.

3. It meets one of the following conditions:

I. It received direct appropriations in furtherance of one of

these purposes from the State in at least three fiscal

years.

II. It was organized to perform one of these purposes for

an organization that meets condition I of this

sub-subdivision.

III. It is an affiliate of an entity that meets condition II of

this sub-subdivision.

c. An institute that (i) is administratively located within a constituent

institution of The University of North Carolina, (ii) is financed in part

by a domestic or foreign corporation that is tax-exempt pursuant to

section 501(c)(3) of the Code, (iii) has as a principal purpose the

stimulation of economic development based on the advancement of

science, engineering, and technology, and (iv) funds, either directly or

in collaboration with other entities, small businesses engaging in

developing technology.

(6) North Carolina Enterprise Corporation. – A corporation established in

accordance with Article 3 of Chapter 53A of the General Statutes or a limited

partnership in which a North Carolina Enterprise Corporation is the only

general partner.


(7b) Qualified business. – A qualified business venture, a qualified grantee

business, or a qualified licensee business.


(8) Qualified business venture. – A business that (i) engages primarily in

manufacturing, processing, warehousing, wholesaling, research and

development, or a service-related industry, and (ii) is registered with the

Secretary of State under G.S. 105-163.013.

(9) Qualified grantee business. – A business that (i) is registered with the

Secretary of State under G.S. 105-163.013, and (ii) has received during the

current year or any of the preceding three years a grant, an investment, or

other funding from a federal agency under the Small Business Innovation

Research Program administered by the United States Small Business

Administration or from a granting entity as defined in this section.

(9a) Qualified licensee business. – A business that meets all of the following

conditions:

a. It is registered with the Secretary of State under G.S. 105-163.013.

b. During its most recent fiscal year before filing an application for

registration under G.S. 105-163.013, it had gross revenues, as

determined in accordance with generally accepted accounting

principles, of one million dollars ($1,000,000) or less on a

consolidated basis.

c. It has been certified by a constituent institution of The University of

North Carolina or a research university as currently performing under

a licensing agreement with the institution or university for the purpose

of commercializing technology developed at the institution or

university. For the purpose of this section, a research university is an

institution of higher education classified as a Doctoral/Research

University, Extensive or Intensive, in the most recent edition of "A

Classification of Institutions of Higher Education", the official report

of The Carnegie Foundation for the Advancement of Teaching.

(10) Real estate-related business. – A business that is involved in or related to the

brokerage, selling, purchasing, leasing, operating, or managing of hotels,

motels, nursing homes or other lodging facilities, golf courses, sports or social

clubs, restaurants, storage facilities, or commercial or residential lots or

buildings is a real estate-related business, except that a real estate-related

business does not include (i) a business that purchases or leases real estate

from others for the purpose of providing itself with facilities from which to

conduct a business that is not itself a real estate-related business or (ii) a

business that is not otherwise a real estate-related business but that leases,

subleases, or otherwise provides to one or more other persons a number of

square feet of space which in the aggregate does not exceed fifty percent

(50%) of the number of square feet of space occupied by the business for its

other activities.

(10a) Related person. – A person described in one of the relationships set forth in

section 267(b) or 707(b) of the Code.

(11) Security. – A security as defined in Section 2(1) of the Securities Act of 1933,

15 U.S.C. § 77b(1).

(12) Selling or leasing at retail. – A business is selling or leasing at retail if the

business either (i) sells or leases any product or service of any nature from a


store or other location open to the public generally or (ii) sells or leases

products or services of any nature by means other than to or through one or

more other businesses.

(13) Service-related industry. – A business is engaged in a service-related industry,

whether or not it also sells a product, if it provides services to customers or

clients and does not as a substantial part of its business engage in a business

described in G.S. 105-163.013(b)(4). A business is engaged as a substantial

part of its business in an activity described in G.S. 105-163.013(b)(4) if (i) its

gross revenues derived from all activities described in that subdivision exceed

twenty-five percent (25%) of its gross revenues in any fiscal year or (ii) it is

established as one of its primary purposes to engage in any activities described

in that subdivision, whether or not its purposes were stated in its articles of

incorporation or similar organization documents.

(14) Subordinated debt. – Indebtedness that is not secured and is subordinated to

all other indebtedness of the issuer issued or to be issued to a financial

institution other than a financial institution described in subdivisions (5)(ii)

through (5)(v) of this section. Except as provided in G.S. 105-163.014(d1),

any portion of indebtedness that matures earlier than five years after its

issuance is not subordinated debt. (1987, c. 852, s. 1; 1987 (Reg. Sess., 1988),

c. 882, s. 2; 1989 (Reg. Sess., 1990), c. 848, s. 2; 1991, c. 637, s. 1; 1993, c.

443, s. 1; 1996, 2nd Ex. Sess., c. 14, s. 7; 1997-6, s. 5; 1998-98, ss. 46, 69;

1998-212, ss. 29A.15(a), 29A.16(c), (d); 1999-369, s. 5.6; 2002-99, s. 3;

2003-414, s. 2; 2003-416, s. 4(a).)

§ 105-163.011. (Repealed effective for investments made on or after January 1, 2014) Tax

credits allowed.

(a) No Credit for Brokered Investments. – No credit is allowed under this section for a

purchase of equity securities or subordinated debt if a broker's fee or commission or other similar

remuneration is paid or given directly or indirectly for soliciting the purchase.

(b) Individuals. – Subject to the limitations contained in G.S. 105-163.012, an individual

who purchases the equity securities or subordinated debt of a qualified business directly from

that business is allowed as a credit against the tax imposed by Part 2 of this Article for the

taxable year an amount equal to twenty-five percent (25%) of the amount invested. The

aggregate amount of credit allowed an individual for one or more investments made in a single

taxable year under this Part, whether directly or indirectly as owner of a pass-through entity, may

not exceed fifty thousand dollars ($50,000). The credit may not be taken for the year in which

the investment is made but may be taken for the taxable year beginning during the calendar year

in which the application for the credit becomes effective as provided in subsection (c) of this

section.

(b1) Pass-Through Entities. – This subsection does not apply to a pass-through entity that

has committed capital under management in excess of five million dollars ($5,000,000) or to a

pass-through entity that is a qualified business or a North Carolina Enterprise Corporation.

Subject to the limitations provided in G.S. 105-163.012, a pass-through entity that purchases the

equity securities or subordinated debt of a qualified business directly from the business is eligible

for a tax credit equal to twenty-five percent (25%) of the amount invested. The aggregate amount

of credit allowed a pass-through entity for one or more investments made in a single taxable year


under this Part, whether directly or indirectly as owner of another pass-through entity, may not

exceed seven hundred fifty thousand dollars ($750,000). The pass-through entity is not eligible

for the credit for the year in which the investment by the pass-through entity is made but is

eligible for the credit for the taxable year beginning during the calendar year in which the

application for the credit becomes effective as provided in subsection (c) of this section.

Each individual who is an owner of a pass-through entity is allowed as a credit against the

tax imposed by Part 2 of this Article for the taxable year an amount equal to the owner's

allocated share of the credits for which the pass-through entity is eligible under this subsection.

The aggregate amount of credit allowed an individual for one or more investments made in a

single taxable year under this Part, whether directly or indirectly as owner of a pass-through

entity, may not exceed fifty thousand dollars ($50,000).

If an owner's share of the pass-through entity's credit is limited due to the maximum

allowable credit under this section for a taxable year, the pass-through entity and its owners may

not reallocate the unused credit among the other owners.

(c) Application. – To be eligible for the tax credit provided in this section, the taxpayer

must file an application for the credit with the Secretary. The application should be filed on or

before April 15 of the year following the calendar year in which the investment was made. The

Secretary may not accept an application filed after October 15 of the year following the calendar

year in which the investment was made. An application is effective for the year in which it is

timely filed. The application must be on a form prescribed by the Secretary and must include any

supporting documentation that the Secretary may require. If an investment for which a credit is

applied for was paid for other than in money, the taxpayer must include with the application a

certified appraisal of the value of the property used to pay for the investment. The application for

a credit for an investment made by a pass-through entity must be filed by the pass-through entity.

(d) Penalties. – The penalties provided in G.S. 105-236 apply in this Part. (1987, c. 852,

s. 1; 1987 (Reg. Sess., 1988), c. 882, ss. 3, 3.1; 1989 (Reg. Sess., 1990), c. 848, s. 3; 1991, c.

637, s. 2; 1993, c. 443, s. 2; 1995, c. 491, s. 1; 1996, 2nd Ex. Sess., c. 14, s. 7; 1998-98, s. 71;

1998-212, s. 29A.15(a); 1999-337, s. 27; 2003-414, s. 3; 2007-422, s. 2; 2009-445, s. 9(a).)

§ 105-163.012. (Repealed effective for investments made on or after January 1, 2014)

Limit; carry-over; ceiling; reduction in basis.

(a) The credit allowed a taxpayer under G.S. 105-163.011 may not exceed the amount of

income tax imposed by Part 2 of this Article for the taxable year reduced by the sum of all other

credits allowable except tax payments made by or on behalf of the taxpayer. The amount of

unused credit allowed under G.S. 105-163.011 may be carried forward for the next five

succeeding years.

(b) The total amount of all tax credits allowed to taxpayers under G.S. 105-163.011 for

investments made in a calendar year may not exceed seven million five hundred thousand dollars

($7,500,000). The Secretary of Revenue shall calculate the total amount of tax credits claimed

from the applications filed pursuant to G.S. 105-163.011(c). If the total amount of tax credits

claimed for investments made in a calendar year exceeds this maximum amount, the Secretary

shall allow a portion of the credits claimed by allocating the maximum amount in tax credits in

proportion to the size of the credit claimed by each taxpayer.

(c) If a credit claimed under G.S. 105-163.011 is reduced as provided in this section, the

Secretary shall notify the taxpayer of the amount of the reduction of the credit on or before

December 31 of the year following the calendar year in which the investment was made. The


Secretary's allocations based on applications filed pursuant to G.S. 105-163.011(c) are final and

shall not be adjusted to account for credits applied for but not claimed.

(d) The taxpayer's basis in the equity securities or subordinated debt acquired as a result

of an investment in a qualified business shall be reduced for the purposes of this Article by the

amount of allowable credit. "Allowable credit" means the amount of credit allowed under G.S.

105-163.011 reduced as provided in subsection (c) of this section. (1987, c. 852, s. 1; 1987 (Reg.

Sess., 1988), c. 882, ss. 4, 4.1; 1989 (Reg. Sess., 1990), c. 848, s. 4; 1991, c. 637, s. 3; 1993, c.

443, s. 3; 1993 (Reg. Sess., 1994), c. 745, s. 8; 1996, 2nd Ex. Sess., c. 14, ss. 6, 7; 1998-98, s. 71;

1998-212, s. 29A.15(a); 2003-414, s. 4; 2004-124, s. 32C.1; 2008-107, s. 28.26(a); 2009-445, s.

9(b).)

§ 105-163.013. (Repealed for investments made on or after January 1, 2014) Registration.


(b) Qualified Business Ventures. – In order to qualify as a qualified business venture

under this Part, a business must be registered with the Securities Division of the Department of

the Secretary of State. To register, the business must file with the Secretary of State an

application and any supporting documents the Secretary of State may require from time to time

to determine that the business meets the requirements for registration as a qualified business

venture. A business meets the requirements for registration as a qualified business venture if all

of the following are true as of the date the business files the required application:

(1) Repealed by Session Laws 1996, Second Extra Session, c. 14, s. 7.

(1a) Reserved for future codification purposes.

(1b) Either (i) it was organized after January 1 of the calendar year in which its

application is filed or (ii) during its most recent fiscal year before filing the

application, it had gross revenues, as determined in accordance with generally

accepted accounting principles, of five million dollars ($5,000,000) or less on

a consolidated basis.

(2) Repealed by Session Laws 1996, Second Extra Session, c. 14, s. 7.

(3) It is organized to engage primarily in manufacturing, processing,

warehousing, wholesaling, research and development, or a service-related

industry.

(4) It does not engage as a substantial part of its business in any of the following:

a. Providing a professional service as defined in Chapter 55B of the

General Statutes.

b. Construction or contracting.

c. Selling or leasing at retail.

d. The purchase, sale, or development, or purchasing, selling, or holding

for investment of commercial paper, notes, other indebtedness,

financial instruments, securities, or real property, or otherwise make

investments.

e. Providing personal grooming or cosmetics services.

f. Offering any form of entertainment, amusement, recreation, or athletic

or fitness activity for which an admission or a membership is charged.

(5) It was not formed for the primary purpose of acquiring all or part of the stock

or assets of one or more existing businesses.

(6) It is not a real estate-related business.


The effective date of registration for a qualified business venture whose application is

accepted for registration is 60 days before the date its application is filed. No credit is allowed

under this Part for an investment made before the effective date of the registration or after the

registration is revoked. For the purpose of this Article, if a taxpayer's investment is placed

initially in escrow conditioned upon other investors' commitment of additional funds, the date of

the investment is the date escrowed funds are transferred to the qualified business venture free of

the condition.

To remain qualified as a qualified business venture, the business must renew its registration

annually as prescribed by rule by filing a financial statement for the most recent fiscal year

showing gross revenues, as determined in accordance with generally accepted accounting

principles, of five million dollars ($5,000,000) or less on a consolidated basis and an application

for renewal in which the business certifies the facts required in the original application.

Failure of a qualified business venture to renew its registration by the applicable deadline

shall result in revocation of its registration effective as of the next day after the renewal deadline,

but shall not result in forfeiture of tax credits previously allowed to taxpayers who invested in the

business except as provided in G.S. 105-163.014. The Secretary of State shall send the qualified

business venture notice of revocation within 60 days after the renewal deadline. A qualified

business venture may apply to have its registration reinstated by the Secretary of State by filing

an application for reinstatement, accompanied by the reinstatement application fee and a late

filing penalty of one thousand dollars ($1,000), within 30 days after receipt of the revocation

notice from the Secretary of State. A business that seeks approval of a new application for

registration after its registration has been revoked must also pay a penalty of one thousand

dollars ($1,000). A registration that has been reinstated is treated as if it had not been revoked.

If the gross revenues of a qualified business venture exceed five million dollars ($5,000,000)

in a fiscal year, the business must notify the Secretary of State in writing of this fact by filing a

financial statement showing the revenues of the business for that year.

(b1) Qualified Licensee Businesses. – In order to qualify as a qualified licensee business




to determine that the business meets the requirements for registration as a qualified licensee

business. The requirements for registration as a qualified licensee business are set out in G.S.

105-163.010.

The effective date of registration for a qualified licensee business whose application is

accepted for registration is the filing date of its application. No credit is allowed under this Part

for an investment made before the effective date of the registration or after the registration is

revoked.

To remain qualified as a qualified licensee business, the business must renew its registration

annually as prescribed by rule by filing a financial statement for the most recent fiscal year

showing gross revenues, as determined in accordance with generally accepted accounting

principles, of one million dollars ($1,000,000) or less on a consolidated basis and an application

for renewal in which the business certifies the facts required in the original application.

Failure of a qualified licensee venture to renew its registration by the applicable deadline

results in revocation of its registration effective as of the next day after the renewal deadline, but

does not result in forfeiture of tax credits previously allowed to taxpayers who invested in the

business except as provided in G.S. 105-163.014. The Secretary of State shall send the qualified


licensee business notice of revocation within 60 days after the renewal deadline. A qualified

licensee business may apply to have its registration reinstated by the Secretary of State by filing

an application for reinstatement, accompanied by the reinstatement application fee and a late

filing penalty of one thousand dollars ($1,000), within 30 days after receipt of the revocation

notice from the Secretary of State. A business that seeks approval of a new application for

registration after its registration has been revoked must also pay a penalty of one thousand

dollars ($1,000). A registration that has been reinstated is treated as if it had not been revoked.

If the gross revenues of a qualified business venture exceed one million dollars ($1,000,000)

in a fiscal year, the business must notify the Secretary of State in writing of this fact by filing a

financial statement showing the revenues of the business for that year.

(c) Qualified Grantee Businesses. – In order to qualify as a qualified grantee business




to determine that the business meets the requirements for registration as a qualified grantee

business. The requirements for registration as a qualified grantee business are set out in G.S.

105-163.010.

The effective date of registration for a qualified grantee business whose application is

accepted for registration is the filing date of its application. No credit is allowed under this Part

for an investment made before the effective date of the registration or after the registration is

revoked.

To remain qualified as a qualified grantee business, the business must renew its registration

annually as prescribed by rule by filing an application for renewal in which the business certifies

the facts demonstrating that it continues to meet the applicable requirements for qualification.

(d) Application Forms; Rules; Fees. – Applications for registration, renewal of

registration, and reinstatement of registration under this section shall be in the form required by

the Secretary of State. The Secretary of State may, by rule, require applicants to furnish

supporting information in addition to the information required by subsections (b), (b1), and (c) of

this section. The Secretary of State may adopt rules in accordance with Chapter 150B of the

General Statutes that are needed to carry out the Secretary's responsibilities under this Part. The

Secretary of State shall prepare blank forms for the applications and shall distribute them

throughout the State and furnish them on request. Each application shall be signed by the owners

of the business or, in the case of a corporation, by its president, vice-president, treasurer, or

secretary. There shall be annexed to the application the affirmation of the person making the

application in the following form: "Under penalties prescribed by law, I certify and affirm that to

the best of my knowledge and belief this application is true and complete." A person who

submits a false application is guilty of a Class 1 misdemeanor.

The fee for filing an application for registration under this section is one hundred dollars

($100.00). The fee for filing an application for renewal of registration under this section is fifty

dollars ($50.00). The fee for filing an application for reinstatement of registration under this

section is fifty dollars ($50.00).

An application for renewal of registration under this section must indicate whether the

applicant is a minority business, as defined in G.S. 143-128, and include a report of the number

of jobs the business created during the preceding year that are attributable to investments that

qualify under this section for a tax credit and the average wages paid by each job. An application


that does not contain this information is incomplete and the applicant's registration may not be

renewed until the information is provided.

(e) Revocation of Registration. – If the Securities Division of the Department of the

Secretary of State finds that any of the information contained in an application of a business

registered under this section is false, it shall revoke the registration of the business. The

Secretary of State shall not revoke the registration of a business solely because it ceases business

operations for an indefinite period of time, as long as the business renews its registration each

year as required under this section.

(f) Transfer of Registration. – A registration as a qualified business may not be sold or

otherwise transferred, except that if a qualified business enters into a merger, conversion,

consolidation, or other similar transaction with another business and the surviving company

would otherwise meet the criteria for being a qualified business, the surviving company retains

the registration without further application to the Secretary of State. In such a case, the qualified

business must provide the Secretary of State with written notice of the merger, conversion,

consolidation, or similar transaction and the name, address, and jurisdiction of incorporation or

organization of the surviving company.

(g) Report by Secretary of State. – The Secretary of State shall report to the Revenue

Laws Study Committee by October 1 of each year all of the businesses that have registered with

the Secretary of State as qualified business ventures, qualified licensee businesses, and qualified

grantee businesses. The report shall include the name and address of each business, the location

of its headquarters and principal place of business, a detailed description of the types of business

in which it engages, whether the business is a minority business as defined in G.S. 143-128, the

number of jobs created by the business during the period covered by the report, and the average

wages paid by these jobs. (1987, c. 852, s. 1; 1991, c. 637, s. 4; 1993, c. 443, ss. 4, 9; c. 485, s.

12; c. 553, s. 80.1; 1994, Ex. Sess., c. 14, s. 50; 1993 (Reg. Sess., 1994), c. 745, ss. 9, 10; 1996,

2nd Ex. Sess., c. 14, s. 7; 1998-98, s. 69; 1998-212, ss. 29A.15(a), 29A.16(e); 1999-369, s. 5.7;

2001-414, s. 12; 2002-99, s. 4; 2003-414, s. 5.)

§ 105-163.014. (Repealed for investments made on or after January 1, 2014) Forfeiture of

credit.

(a) Participation in Business. – A taxpayer who has received a credit under this Part for

an investment in a qualified business forfeits the credit if, within three years after the investment

was made, the taxpayer participates in the operation of the qualified business. For the purpose of

this section, a taxpayer participates in the operation of a qualified business if the taxpayer, the

taxpayer's spouse, parent, sibling, or child, or an employee of any of these individuals or of a

business controlled by any of these individuals, provides services of any nature to the qualified

business for compensation, whether as an employee, a contractor, or otherwise. However, a

person who provides services to a qualified business, whether as an officer, a member of the

board of directors, or otherwise does not participate in its operation if the person receives as

compensation only reasonable reimbursement of expenses incurred in providing the services,

participation in a stock option or stock bonus plan, or both.

(b) False Application. – A taxpayer who has received a credit under this Part for an

investment in a qualified business forfeits the credit if the registration of the qualified business is

revoked because information in the registration application was false at the time the application

was filed with the Secretary of State.

(c) Repealed by Session Laws 1996, Second Extra Session, c. 14, s. 7.


(d) Transfer or Redemption of Investment. – A taxpayer who has received a credit under

this Part for an investment in a qualified business forfeits the credit in the following cases:

(1) Within one year after the investment was made, the taxpayer transfers any of

the securities received in the investment that qualified for the tax credit to

another person or entity, other than in a transfer resulting from one of the

following:

a. The death of the taxpayer.

b. A final distribution in liquidation to the owners of a taxpayer that is a

corporation or other entity.

c. A merger, conversion, consolidation, or similar transaction requiring

approval by the owners of the qualified business under applicable State

law, to the extent the taxpayer does not receive cash or tangible

property in the merger, conversion, consolidation, or other similar

transaction.

(2) Except as provided in subsection (d1) of this section, within five years after

the investment was made, the qualified business in which the investment was

made makes a redemption with respect to the securities received in the

investment.

In the event the taxpayer transfers fewer than all the securities in a manner that would result

in a forfeiture, the amount of the credit that is forfeited is the product obtained by multiplying the

aggregate credit attributable to the investment by a fraction whose numerator equals the number

of securities transferred and whose denominator equals the number of securities received on

account of the investment to which the credit was attributable. In addition, if the redemption

amount is less than the amount invested by the taxpayer in the securities to which the redemption

is attributable, the amount of the credit that is forfeited is further reduced by multiplying it by a

fraction whose numerator equals the redemption amount and whose denominator equals the

aggregate amount invested by the taxpayer in the securities involved in the redemption. The term

"redemption amount" means all amounts paid that are treated as a distribution in part or full

payment in exchange for securities under section 302(a) of the Code.

(d1) Certain Redemptions Allowed. – Forfeiture of a credit does not occur under this

section if a qualified business venture that engages primarily in motion picture film production

makes a redemption with respect to securities received in an investment and the following

conditions are met:

(1) The redemption occurred because the qualified business venture completed

production of a film, sold the film, and was liquidated.

(2) Neither the qualified business venture nor a related person continues to

engage in business with respect to the film produced by the qualified business

venture.

(e) Effect of Forfeiture. – A taxpayer who forfeits a credit under this section is liable for

all past taxes avoided as a result of the credit plus interest at the rate established under G.S.

105-241.21, computed from the date the taxes would have been due if the credit had not been

allowed. The past taxes and interest are due 30 days after the date the credit is forfeited; a

taxpayer who fails to pay the past taxes and interest by the due date is subject to the penalties

provided in G.S. 105-236. (1987, c. 852, s. 1; 1991, c. 637, s. 5; 1993, c. 443, s. 5; 1996, 2nd Ex.

Sess., c. 14, s. 7; 1998-98, s. 69; 1998-212, ss. 29A.15(a), 29A.16(a), (b); 1999-369, s. 5.8;

2003-414, s. 6; 2007-491, s. 44(1)a.)


§ 105-163.015. Sunset.

This Part is repealed effective for investments made on or after January 1, 2014. (2002-99, s.

5; 2003-414, s. 1; 2004-124, s. 32C.2; 2007-422, s. 1; 2010-31, s. 31.5(b); 2012-36, s. 10.)

Article 4A.

Withholding; Estimated Income Tax for Individuals.



(1) Compensation. – Consideration a payer pays to any of the following:

a. A nonresident individual or nonresident entity for personal services


b. An ITIN holder who is a contractor and not an employee for services





2014) Dependent. – An individual with respect to whom an income tax

exemption is allowed under the Code.

(4) Employee. – An individual, whether a resident or a nonresident of this State,

who performs services in this State for wages or an individual who is a

resident of this State and performs services outside this State for wages. The

term includes an ordained or licensed member of the clergy who elects to be

considered an employee under G.S. 105-163.1A, an officer of a corporation,

and an elected public official.

(5) Employer. – A person for whom an individual performs services for wages. In

applying the requirements to withhold income taxes from wages and pay the

withheld taxes, the term includes a person who:

a. Controls the payment of wages to an individual for services performed

for another.

b. Pays wages on behalf of a person who is not engaged in trade or

business in this State.

c. Pays wages on behalf of a unit of government that is not located in this

State.

d. Pays wages for any other reason.

(6) Individual. – Defined in G.S. 105-134.1.

(6a) ITIN contractor. – An ITIN holder who performs services in this State for

compensation other than wages.

(6b) ITIN holder. – A person whose taxpayer identification number is an

Individual Taxpayer Identification Number (ITIN).

(7) Miscellaneous payroll period. – A payroll period other than a daily, weekly,

biweekly, semimonthly, monthly, quarterly, semiannual, or annual payroll

period.

(7a) Nonresident contractor. – Either of the following:


a. A nonresident individual who performs in this State for compensation

other than wages any personal services in connection with a

performance, an entertainment, an athletic event, a speech, or the

creation of a film, radio, or television program.

b. A nonresident entity that provides for the performance in this State for

compensation of any personal services in connection with a

performance, an entertainment, an athletic event, a speech, or the

creation of a film, radio, or television program.

(8) Nonresident entity. – Any of the following:

a. A foreign limited liability company, defined using the same definition

for the term "foreign LLC" in G.S. 57D-1-03, that has not obtained a

certificate of authority from the Secretary of State pursuant to Article 7

of Chapter 57D of the General Statutes.

b. A foreign limited partnership as defined in G.S. 59-102 or a general

partnership formed under the laws of any jurisdiction other than this

State, unless the partnership maintains a permanent place of business

in this State.

c. A foreign corporation, as defined in G.S. 55-1-40, that has not

obtained a certificate of authority from the Secretary of State pursuant

to Article 15 of Chapter 55 of the General Statutes.


(10) Payer. – A person who, in the course of a trade or business, pays

compensation to any of the following:

a. A nonresident individual or a nonresident entity compensation for

personal services performed in this State.

b. An ITIN holder who is a contractor and not an employee for services


(11) Payroll period. – A period for which an employer ordinarily pays wages to an

employee of the employer.

(11a) Pension payer. – A payor or a plan administrator with respect to a pension

payment under section 3405 of the Code.

(11b) Pension payment. – A periodic payment or a nonperiodic distribution as those

terms are defined in section 3405 of the Code.


(13) Wages. – The term has the same meaning as in section 3401 of the Code

except it does not include either of the following:

a. The amount of severance wages paid to an employee during the

taxable year that is exempt from State income tax for that taxable year

under G.S. 105-134.6(b)(11).

b. The amount an employer pays an employee as reimbursement for

ordinary and necessary expenses incurred by the employee on behalf

of the employer and in the furtherance of the business of the employer.

(14) Withholding agent. – An employer, a pension payer, or a payer. (1959, c.

1259, s. 1; 1967, c. 716, s. 3; 1973, c. 476, s. 193; 1977, c. 657, s. 5; 1979, c.

801, s. 70; 1983, c. 713, ss. 79, 82; 1985, c. 394, s. 1; c. 656, s. 7; 1985 (Reg.

Sess., 1986), c. 853, s. 1; 1987, c. 778, s. 1; 1987 (Reg. Sess., 1988), c. 1015,


s. 5; 1989, c. 36, s. 5; c. 728, s. 1.40; 1989 (Reg. Sess., 1990), c. 945, s. 5; c.

981, s. 6; 1991, c. 689, s. 255; 1991 (Reg. Sess., 1992), c. 922, s. 7; 1993, c.

12, s. 9; c. 354, s. 15; 1997-6, s. 6; 1997-109, ss. 1, 2, 4; 1998-162, ss. 1, 2;

1999-414, ss. 1, 2; 2000-126, s. 2; 2003-416, s. 4(b); 2009-476, s. 1;

2013-157, s. 29; 2014-3, s. 14.4(a).)

§ 105-163.1A. Ordained or licensed clergyman may elect to be considered an employee.

An ordained or licensed clergyman who performs services for a church of any religious

denomination may file an election with the Secretary and the church he serves to be considered

an employee of the church instead of self-employed. Until a clergyman files an election,

amounts paid by a church to a clergyman are not subject to withholding. A church shall withhold

taxes from a clergyman's wages after the clergyman files an election with it under this section.

(1985, c. 394, s. 2; 1985 (Reg. Sess., 1986), c. 826, s. 9; 1989 (Reg. Sess., 1990), c. 945, s. 6.)

§ 105-163.2. Employers must withhold taxes.

(a) (Effective for taxable years before January 1, 2014) Withholding Required. – An

employer shall deduct and withhold from the wages of each employee the State income taxes

payable by the employee on the wages. For each payroll period, the employer shall withhold

from the employee's wages an amount that would approximate the employee's income tax

liability under Article 4 of this Chapter if the employer withheld the same amount from the

employee's wages for each similar payroll period in a calendar year. In calculating an employee's

anticipated income tax liability, the employer shall allow for the exemptions, deductions, and

credits to which the employee is entitled under Article 4 of this Chapter. The amount of State

income taxes withheld by an employer is held in trust for the Secretary.

(a) (Effective for taxable years beginning on or after January 1, 2014) Withholding

Required. – An employer shall deduct and withhold from the wages of each employee the State

income taxes payable by the employee on the wages. For each payroll period, the employer shall

withhold from the employee's wages an amount that would approximate the employee's income

tax liability under Article 4 of this Chapter if the employer withheld the same amount from the

employee's wages for each similar payroll period in a calendar year. In calculating an employee's

anticipated income tax liability, the employer shall allow for the additions that employee is

required to make under Article 4 of this Chapter and the deductions, and credits to which the

employee is entitled under Article 4 of this Chapter. The amount of State income taxes withheld

by an employer is held in trust for the Secretary.

(b) (Effective for taxable years before January 1, 2014) Withholding Tables. – The

manner of withholding and the amount to be withheld shall be determined in accordance with

tables and rules adopted by the Secretary. The withholding exemption allowed by these tables

and rules shall, as nearly as possible, approximate the exemptions, deductions, and credits to

which an employee would be entitled under Article 4 of this Chapter. The Secretary shall

promulgate tables for computing amounts to be withheld with respect to different rates of wages

for different payroll periods applicable to the various combinations of exemptions to which an

employee may be entitled and taking into account the appropriate standard deduction. The tables

may provide for the same amount to be withheld within reasonable salary brackets or ranges so

designed as to result in the withholding during a year of approximately the amount of an

employee's indicated income tax liability for that year. The withholding of wages pursuant to and

in accordance with these tables shall be deemed as a matter of law to constitute compliance with


the provisions of subsection (a) of this section, notwithstanding any other provisions of this

Article.

(b) (Effective for taxable years beginning on or after January 1, 2014 and before

January 1, 2016) Withholding Tables. – The manner of withholding and the amount to be

withheld shall be determined in accordance with tables and rules adopted by the Secretary. The

withholding allowances provided by these tables and rules shall, as nearly as possible,

approximate the additions the employee is required to make under Article 4 of this Chapter and

the deductions, and credits to which an employee is entitled under Article 4 of this Chapter. The

Secretary shall promulgate tables for computing amounts to be withheld with respect to different

rates of wages for different payroll periods applicable to the various combinations of allowances

to which an employee may be entitled and taking into account the appropriate standard

deduction. The tables may provide for the same amount to be withheld within reasonable salary

brackets or ranges so designed as to result in the withholding during a year of approximately the

amount of an employee's indicated income tax liability for that year. The withholding of wages

pursuant to and in accordance with these tables shall be deemed as a matter of law to constitute

compliance with the provisions of subsection (a) of this section, notwithstanding any other

provisions of this Article.

(b) (Effective for taxable years beginning on or after January 1, 2016) Withholding

Tables. – The manner of withholding and the amount to be withheld shall be determined in

accordance with tables and rules adopted by the Secretary. The withholding of wages pursuant to

and in accordance with these tables shall be deemed as a matter of law to constitute compliance

with the provisions of subsection (a) of this section, notwithstanding any other provisions of this

Article. The Secretary shall promulgate tables for computing amounts to be withheld with

respect to different rates of wages for different payroll periods applicable to the various

combinations of allowances to which an employee may be entitled and taking into account the

appropriate standard deduction. The tables may provide for the same amount to be withheld

within reasonable salary brackets or ranges so designed as to result in the withholding during a

year of approximately the amount of an employee's indicated income tax liability for that year.

The withholding allowances provided by these tables and rules shall, as nearly as possible,

approximate the amount of the employee's indicated income tax liability for that year based upon

all of the following factors:

(1) An income tax rate equal to the rate set in G.S. 105-153.7 plus one-tenth of

one percent (0.1%).

(2) The additions the employee is required to make under Article 4 of this

Chapter.

(3) The deductions and credits to which an employee is entitled under Article 4 of

this Chapter.

(c) Withholding if No Payroll Period. – If wages are paid with respect to a period that is

not a payroll period, the amount to be deducted and withheld shall be that applicable in the case

of a miscellaneous payroll period containing a number of days, excluding Sundays and holidays,

equal to the number of days in the period with respect to which such wages are paid. In any case

in which wages are paid by an employer without regard to any payroll period or other period, the

amount to be deducted and withheld shall be that applicable in the case of a miscellaneous

payroll period containing a number of days equal to the number of days, excluding Sundays and

holidays, which have elapsed since the date of the last payment of such wages by such employer


during the calendar year, or the date of commencement of employment with such employer

during such year, or January 1 of such year, whichever is the later.

(d) Estimated Withholding. – The Secretary may, by rule, authorize employers to

estimate the wages to be paid to an employee during a calendar quarter, calculate the amount to

be withheld for each period based on the estimated wages, and, upon payment of wages to the

employee, adjust the withholding so that the amount actually withheld is the amount that would

be required to be withheld if the employee's payroll period were quarterly.

(e) (Effective for taxable years beginning before January 1, 2016) Alternatives to

Tables. – If the Secretary determines that use of the withholding tables would be impractical,

would impose an unreasonable burden on an employer, or would produce substantially incorrect

results, the Secretary may authorize or require an employer to use some other method of

determining the amounts to be withheld under this Article. The alternative method authorized by

the Secretary must reasonably approximate the predicted income tax liability of the affected

employees. In addition, with the agreement of the employer and employee, the Secretary may

authorize an employer to use an alternative method that results in withholding of a greater

amount than otherwise required under this section.

The Secretary's authorization of an alternative method is discretionary and may be cancelled

at any time without advance notice if the Secretary finds that the method is being abused or is not

resulting in the withholding of an amount reasonably approximating the predicted income tax

liability of the affected employees. The Secretary shall give an employer written notice of any

cancellation and the findings upon which the cancellation is based. The cancellation becomes

effective upon the employer's receipt of this notice or on the third day after the notice was mailed

to the employer, whichever occurs first. If the employer requests a hearing on the cancellation

within 30 days after the cancellation, the Secretary shall grant a hearing. After a hearing, the

Secretary's findings are conclusive.

(e) (Effective for taxable years beginning on or after January 1, 2016) Alternatives to

Tables. – If the Secretary determines that use of the withholding tables would be impractical,

would impose an unreasonable burden on an employer, or would produce substantially incorrect

results, the Secretary may authorize or require an employer to use some other method of

determining the amounts to be withheld under this Article. The alternative method authorized by

the Secretary must reasonably approximate the predicted income tax liability of the affected

employees based upon the factors provided in subsection (b) of this section. In addition, with the

agreement of the employer and employee, the Secretary may authorize an employer to use an

alternative method that results in withholding of a greater amount than otherwise required under

this section.

The Secretary's authorization of an alternative method is discretionary and may be cancelled

at any time without advance notice if the Secretary finds that the method is being abused or is not

resulting in the withholding of an amount reasonably approximating the predicted income tax

liability of the affected employees. The Secretary shall give an employer written notice of any

cancellation and the findings upon which the cancellation is based. The cancellation becomes

effective upon the employer's receipt of this notice or on the third day after the notice was mailed

to the employer, whichever occurs first. If the employer requests a hearing on the cancellation

within 30 days after the cancellation, the Secretary shall grant a hearing. After a hearing, the

Secretary's findings are conclusive. (1959, c. 1259, s. 1; 1973, c. 476, s. 193; 1981, c. 13; 1989,

c. 728, s. 1.41; 1989 (Reg. Sess., 1990), c. 945, s. 7; 1997-109, s. 2; 2014-3, s. 14.5(a); 2015-241,

s. 32.16A(a).)


§ 105-163.2A. Pension payers must withhold taxes.

(a) Definitions. – The definitions provided in section 3405 of the Code apply in this

section.

(b) (Effective for taxable years beginning before January 1, 2015) Withholding

Required. – A pension payer required to withhold federal taxes under section 3405 of the Code

on a pension payment to a resident of this State must deduct and withhold from the payment the

State income taxes payable on the payment. Liability for withholding and paying taxes under this

section on a pension payment falls on the person who would be liable under section 3405 of the

Code for withholding federal taxes on the payment.

Except as otherwise provided in this section, the provisions of this Article apply to a pension

payer's pension payment to a resident of this State as if it were an employer's payment of wages

to an employee. If a pension payer has more than one arrangement under which it may make

pension payments to a resident of this State, each arrangement must be treated separately under

this section.

(b) (Effective for taxable years beginning on or after January 1, 2015) Withholding

Required. – A pension payer required to withhold federal taxes under section 3405 of the Code

on a pension payment to a resident of this State must deduct and withhold from the payment the

State income taxes payable on the payment. Liability for withholding and paying taxes under this

section on a pension payment falls on the person who would be liable under section 3405 of the

Code for withholding federal taxes on the payment.

Except as otherwise provided in this section, the provisions of this Article apply to a pension

payer's pension payment to a resident of this State as if it were an employer's payment of wages

to an employee. The pension payer must file a return, pay the withheld taxes, and report the

amount withheld in the time and manner required under G.S. 105-163.6 and G.S. 105-163.7 as if

the pension payment were wages. If a pension payer has more than one arrangement under which

it may make pension payments to a resident of this State, each arrangement must be treated

separately under this section.

(c) Amount. – In the case of a periodic payment, the pension payer must withhold the

amount that would be required to be withheld under this Article if the payment were a payment

of wages by an employer to an employee for the appropriate payroll period.

In the case of a nonperiodic distribution, the pension payer must withhold taxes equal to four

percent (4%) of the nonperiodic distribution.

(d) Election of No Withholding. – The recipient may elect not to have taxes withheld

under this section to the extent permitted by section 3405 of the Code. The election must be in

the form required by the Secretary. In the case of periodic payments, the election remains in

effect until revoked by the recipient. In the case of a nonperiodic distribution, the election applies

on a distribution-by-distribution basis unless it meets conditions prescribed by the Secretary for

it to apply to subsequent nonperiodic distributions by the pension payer.

A pension payer must notify each recipient of the right to elect not to have taxes withheld

under this section. The notice must comply with the requirements of section 3405 of the Code

and any additional requirements prescribed by the Secretary.

A recipient's election not to have taxes withheld under this section is void if the recipient

fails to furnish the recipient's tax identification number to the pension payer, or the Secretary has

notified the pension payer that the tax identification number furnished by the recipient is

incorrect.


(e) Exemptions. – This section does not apply to the following pension payments:

(1) A pension payment that is wages under this Article.

(2) Any portion of a pension payment that meets both of the following conditions:

a. It is not a distribution or payment from an individual retirement plan as

defined in section 7701 of the Code.

b. The pension payer reasonably believes it is not taxable to the recipient

under Article 4 of this Chapter.

(3) A distribution described in section 404(k)(2) of the Code, relating to dividends

on corporate securities.

(4) A pension payment that consists only of securities of the recipient's employer

corporation plus cash not in excess of two hundred dollars ($200.00) in lieu of

securities of the employer corporation. (1999-414, s. 3; 2000-126, s. 3;

2014-3, s. 14.6(a); 2015-259, s. 7.1(c).)

§ 105-163.2B. (Effective for taxable years beginning before January 1, 2014) North

Carolina State Lottery Commission must withhold taxes.

The North Carolina State Lottery Commission, established by Chapter 18C of the General

Statutes, must deduct and withhold State income taxes from the payment of winnings in an

amount of six hundred dollars ($600.00) or more. The amount of taxes to be withheld is seven

percent (7%) of the winnings. The Commission must file a return, pay the withheld taxes, and

report the amount withheld in the time and manner required under G.S. 105-163.6 as if the

winnings were wages. The taxes the Commission withholds are held in trust for the Secretary.

(2005-276, s. 31.1(bb); 2005-344, s. 10.2(a); 2006-259, s. 8(f); 2006-264, s. 91(b).)

§ 105-163.2B. (Effective for taxable years beginning on or after January 1, 2014 and before

January 1, 2015) North Carolina State Lottery Commission must withhold taxes.



amount of six hundred dollars ($600.00) or more. The amount of taxes to be withheld is a

percentage of the winnings. The percentage is the individual income tax rate in G.S. 105-153.7.

The Commission must file a return, pay the withheld taxes, and report the amount withheld in the

time and manner required under G.S. 105-163.6 as if the winnings were wages. The taxes the

Commission withholds are held in trust for the Secretary. (2005-276, s. 31.1(bb); 2005-344, s.

10.2(a); 2006-259, s. 8(f); 2006-264, s. 91(b); 2013-316, s. 1.3(g).)

§ 105-163.2B. (Effective for taxable years beginning on or after January 1, 2015) North

Carolina State Lottery Commission must withhold taxes.



amount of six hundred dollars ($600.00) or more. The amount of taxes to be withheld is a

percentage of the winnings. The percentage is the individual income tax rate in G.S. 105-153.7.

The Commission must file a return, pay the withheld taxes, and report the amount withheld in the

time and manner required under G.S. 105-163.6 and G.S. 105-163.7 as if the winnings were

wages. The taxes the Commission withholds are held in trust for the Secretary. (2005-276, s.

31.1(bb); 2005-344, s. 10.2(a); 2006-259, s. 8(f); 2006-264, s. 91(b); 2013-316, s. 1.3(g);

2015-259, s. 7.1(d).)


§ 105-163.3. Certain payers must withhold taxes.

(a) Requirement. – Every payer who pays more than one thousand five hundred dollars

($1,500) during a calendar year to either a nonresident contractor or an ITIN contractor must

deduct and withhold from compensation paid to the contractor the State income taxes payable by

the contractor on the compensation as provided in this section. The amount of taxes to be

withheld is four percent (4%) of the compensation paid to the contractor. The taxes a payer

withholds are held in trust for the Secretary.

(b) Exemptions. – The withholding requirement does not apply to the following:

(1) Compensation that is subject to the withholding requirement of G.S.

105-163.2.

(2) Compensation paid to an ordained or licensed member of the clergy.

(3) Compensation paid to an entity exempt from tax under G.S. 105-130.11.


Compensation paid to an alien, as described by 8 U.S.C. §

1101(a)(15)(H)(ii)(a), that is not subject to federal income tax withholding

under section 1441 of the Code.

(c) (Repealed effective for taxable years beginning on or after January 1, 2015)

Returns. – A payer must file a return with the Secretary and pay the withheld taxes to the

Secretary in accordance with the requirements in G.S. 105-163.6.

(d) (Effective for taxable years beginning before January 1, 2015) Annual Statement

and Report. – A payer required to deduct and withhold from a contractor's compensation under

this section must give the contractor a written statement that sets out the following information

and any other information required by the Secretary:

(1) The payer's name, address, and taxpayer identification number.

(2) The contractor's name, address, and taxpayer identification number.

(3) The total amount of compensation paid during the calendar year.

(4) The total amount deducted and withheld under this section during the calendar

year.

This statement is due by January 31 following the end of the calendar year, unless the personal

services for which the payer is paying are completed before the end of the calendar year and the

contractor requests the statement when the services are completed. In this circumstance, the

statement is due within 45 days after the payer's last payment of compensation to the contractor.

Each payer shall file with the Secretary an annual report that compiles the information

contained in each of the payer's statements to contractors and any other information required by

the Secretary in the manner required by the Secretary. This report is due on the date prescribed

by the Secretary and is in lieu of the information report required by G.S. 105-154.

(d) (Effective for taxable years beginning on or after January 1, 2015) Returns,

Annual Statement, and Report. – A payer required to deduct and withhold from a contractor's

compensation under this section must file a return, pay the withheld taxes, and report the amount

withheld in the time and manner required under G.S. 105-163.6 and G.S. 105-163.7 as if the

compensation were wages.

(e) Records. – This subsection applies to a payer who pays compensation for personal

services performed in connection with a performance, an entertainment, an athletic event, a

speech, or the creation of a film, radio, or television program. If a payer does not withhold from

payments to a nonresident entity because the entity is exempt from tax under G.S. 105-130.11,


the payer must obtain from the entity documentation proving its exemption from tax. If a payer

does not withhold from payments to a nonresident corporation or a nonresident limited liability

company because the entity has obtained a certificate of authority from the Secretary of State, the

payer must obtain from the entity its corporate identification number issued by the Secretary of

State. If a payer does not withhold from payments to an individual because the individual is a

resident, the payer must obtain the individual's address and social security number. If a payer

does not withhold from a partnership because the partnership has a permanent place of business

in this State, the payer must obtain the partnership's address and taxpayer identification number.

The payer must retain this information with its records.

(f) Payer May Repay Amounts Withheld Improperly. – A payer may refund to a person

any amount the payer withheld improperly from the person under this section, if the refund is

made before the end of the calendar year and before the payer furnishes the person the annual

statement required by subsection (d) of this section. An amount is withheld improperly if it is

withheld from a payment to a person who is not a nonresident contractor or an ITIN contractor, if

it is withheld from a payment that is not compensation, or if it is in excess of the amount required

to be withheld under this section. A payer who makes a refund under this section must take the

following actions:

(1) Not report the amount refunded on the annual statement required by

subsection (d) of this section.

(2) Either not pay to the Secretary the amount refunded or, if the amount refunded

has already been paid to the Secretary, reduce by the amount refunded the

next payments to the Secretary of taxes withheld from the person. (1959, c.

1259, s. 1; 1973, c. 476, s. 193; 1989, c. 728, s. 1.42; 1989 (Reg. Sess., 1990),

c. 945, s. 8; 1997-109, s. 2; 1998-98, ss. 11-13; 1998-162, s. 3; 2009-476, s. 2;

2013-414, s. 39(a); 2015-259, s. 7.1(e); 2015-263, s. 2(a).)

§ 105-163.4. Withholding does not create nexus.

A nonresident withholding agent's act in compliance with this Article does not in itself

constitute evidence that the nonresident is doing business in this State. (1959, c. 1259, s. 1; 1989

(Reg. Sess., 1990), c. 945, s. 9; 1997-109, s. 2.)

§ 105-163.5. (Effective for taxable years before January 1, 2014) Employee exemptions

allowable; certificates.

(a) An employee receiving wages is entitled to the exemptions for which the employee

qualifies under Article 4 of this Chapter.

(b) Every employee shall, at the time of commencing employment, furnish his or her

employer with a signed withholding exemption certificate informing the employer of the

exemptions the employee claims, which in no event shall exceed the amount of exemptions to

which the employee is entitled under the Code. If the employee fails to file the exemption

certificate the employer, in computing amounts to be withheld from the employee's wages, shall

allow the employee the exemption accorded a single person with no dependents.

(c) Withholding exemption certificates shall take effect as of the beginning of the first

payroll period that ends on or after the date on which the certificate is furnished, or if payment of

wages is made without regard to a payroll period, then the certificate shall take effect as of the

beginning of the miscellaneous payroll period for which the first payment of wages is made on or

after the date on which the certificate is furnished.


(d) If, on any day during the calendar year, the amount of withholding exemptions to

which the employee is entitled is less than the amount of withholding exemptions claimed by the

employee on the withholding exemption certificate then in effect with respect to the employee,

the employee shall, within 10 days thereafter, furnish the employer with a new withholding

exemption certificate stating the amount of withholding exemptions which the employee then

claims, which shall in no event exceed the amount to which the employee is entitled on that day.

If, on any day during the calendar year, the amount of withholding exemptions to which the

employee is entitled is greater than the amount of withholding exemptions claimed, the employee

may furnish the employer with a new withholding exemption certificate stating the amount of

withholding exemptions which the employee then claims, which shall in no event exceed the

amount to which the employee is entitled on that day.

(e) Withholding exemption certificates must be in the form and contain the information

required by the Secretary. As far as practicable, the Secretary shall cause the form of the

certificates to be substantially similar to federal exemption certificates.

(f) In addition to any criminal penalty provided by law, if an individual furnishes his or

her employer an exemption certificate that contains information which has no reasonable basis

and that results in a lesser amount of tax being withheld under this Article than would have been

withheld if the individual had furnished reasonable information, the individual is subject to a

penalty of fifty percent (50%) of the amount not properly withheld. (1959, c. 1259, s. 1; 1973, c.

476, s. 193; 1981 (Reg. Sess., 1982), c. 1277; 1989, c. 728, s. 1.43; 1997-109, s. 2.)

§ 105-163.5. (Effective for taxable years beginning on or after January 1, 2014) Employee

withholding allowances; certificates.

(a) An employee receiving wages is entitled to the withholding allowances that would

result in the employer withholding approximately the employee's income tax liability under

Article 4 of this Chapter.

(b) Every employee shall, at the time of commencing employment, furnish his or her

employer with a signed withholding allowance certificate informing the employer of the

allowances the employee claims. If the employee fails to file the allowance certificate, the

employer must compute the amount to be withheld from the employee's wages as if the

employee were a single individual with no allowances.

(c) Withholding allowance certificates shall take effect as of the beginning of the first

payroll period that ends on or after the date on which the certificate is furnished, or if payment of

wages is made without regard to a payroll period, then the certificate shall take effect as of the

beginning of the miscellaneous payroll period for which the first payment of wages is made on or

after the date on which the certificate is furnished.

(d) If, on any day during the calendar year, the amount of withholding allowances to

which the employee is entitled is less than the amount of withholding allowances claimed by the

employee on the withholding allowance certificate then in effect with respect to the employee,

the employee shall, within 10 days thereafter, furnish the employer with a new withholding

allowance certificate stating the amount of withholding allowances which the employee then

claims, which shall in no event exceed the amount to which the employee is entitled on that day.

If, on any day during the calendar year, the amount of withholding allowances to which the

employee is entitled is greater than the amount of withholding allowances claimed, the employee

may furnish the employer with a new withholding allowance certificate stating the amount of


withholding allowances that the employee then claims, which shall not exceed the amount to

which the employee is entitled on that day.

(e) Withholding allowance certificates must be in the form and contain the information

required by the Secretary.

(f) In addition to any criminal penalty provided by law, if an individual furnishes his or

her employer an allowance certificate that contains information that has no reasonable basis and

that results in a lesser amount of tax being withheld under this Article than would have been

withheld if the individual had furnished reasonable information, the individual is subject to a

penalty of fifty percent (50%) of the amount not properly withheld. (1959, c. 1259, s. 1; 1973, c.

476, s. 193; 1981 (Reg. Sess., 1982), c. 1277; 1989, c. 728, s. 1.43; 1997-109, s. 2; 2014-3, s.

14.5(b).)

§ 105-163.6. When employer must file returns and pay withheld taxes.

(a) General. – A return is due quarterly or monthly as specified in this section. A return

shall be filed with the Secretary in the manner required by the Secretary, shall report any

payments of withheld taxes made during the period covered by the return, and shall contain any

other information required by the Secretary.

Withheld taxes are payable quarterly, monthly, or semiweekly, as specified in this section. If

the Secretary finds that collection of the amount of taxes this Article requires an employer to

withhold is in jeopardy, the Secretary may require the employer to file a return or pay withheld

taxes at a time other than that specified in this section.

(b) Quarterly. – An employer who withholds an average of less than two hundred fifty

dollars ($250.00) of State income taxes from wages each month must file a return and pay the

withheld taxes on a quarterly basis. A quarterly return covers a calendar quarter and is due by the

last day of the month following the end of the quarter.

(c) Monthly. – An employer who withholds an average of at least two hundred fifty

dollars ($250.00) but less than two thousand dollars ($2,000) from wages each month must file a

return and pay the withheld taxes on a monthly basis. A return for the months of January through

November is due by the 15th day of the month following the end of the month covered by the

return. A return for the month of December is due the following January 31.

(d) Semiweekly. – An employer who withholds an average of at least two thousand

dollars ($2,000) of State income taxes from wages each month shall file a return by the date set

under the Code for filing a return for federal employment taxes attributable to the same wages

and shall pay the withheld State taxes by the date set under the Code for depositing or paying

federal employment taxes attributable to the same wages. The date set by the Code for depositing

or paying federal employment taxes shall be determined without regard to § 6302(g) of the Code.

An extension of time granted to file a return for federal employment taxes attributable to

wages is an automatic extension of time for filing a return for State income taxes withheld from

the same wages, and an extension of time granted to pay federal employment taxes attributable to

wages is an automatic extension of time for paying State income taxes withheld from the same

wages. An employer who pays withheld State income taxes under this subsection is not subject

to interest on or penalties for a shortfall in the amount due if the employer would not be subject

to a failure-to-deposit penalty had the shortfall occurred in a deposit of federal employment taxes

attributable to the same wages and the employer pays the shortfall by the date the employer

would have to deposit a shortfall in the federal employment taxes.


(e) Category. – The Secretary shall monitor the amount of taxes withheld by an employer

or estimate the amount of taxes to be withheld by a new employer and shall direct each employer

to pay withheld taxes in accordance with the appropriate schedule. An employer shall file a

return and pay withheld taxes in accordance with the Secretary's direction until notified in

writing to file and pay under a different schedule. (1959, c. 1259, s. 1; 1973, c. 476, s. 193; c.

1287, s. 7; 1975, 2nd Sess., c. 979, s. 1; 1977, c. 488; 1987, c. 622, s. 9; c. 813, s. 24; 1989 (Reg.

Sess., 1990), c. 945, s. 10; 1993, c. 450, s. 6; 1993 (Reg. Sess., 1994), c. 661, s. 1; 1997-109, s. 2;

2001-427, s. 5(a), (b); 2013-414, s. 39(b).)

§ 105-163.6A. Federal corrections.

If the amount of taxes an employer is required to withhold and pay under the Code is

corrected or otherwise determined by the federal government, the employer must, within six

months after being notified of the correction or final determination by the federal government,

file a return with the Secretary reflecting the corrected or determined amount. The Secretary

must propose an assessment for any additional tax due from the employer as provided in Article

9 of this Chapter. If there has been an overpayment of the tax, the Secretary must either refund

the overpayment to the employer in accordance with G.S. 105-163.9 or credit the amount of the

overpayment to the individual in accordance with G.S. 105-163.10. An employer who fails to

comply with this section is subject to the penalties in G.S. 105-236 and forfeits the right to any

refund due by reason of the determination. Failure of an employer to comply with this section

does not, however, affect an individual's right to a credit under G.S. 105-163.10. (1993 (Reg.

Sess., 1994), c. 582, s. 4; 2007-491, s. 17.)

§ 105-163.7. (Effective for taxable years beginning before January 1, 2015) Statement to

employees; information to Secretary.

(a) Every employer required to deduct and withhold from an employee's wages under

G.S. 105-163.2 shall furnish to the employee in respect to the remuneration paid by the employer

to such employee during the calendar year, on or before January 31 of the succeeding year, or, if

the employment is terminated before the close of the calendar year, within 30 days after the date

on which the last payment of remuneration is made, duplicate copies of a written statement

showing the following:

(1) The employer's name, address, and taxpayer identification number.

(2) The employee's name and social security number.

(3) The total amount of wages.

(4) The total amount deducted and withheld under G.S. 105-163.2.

(b) The Secretary may require an employer to include information not listed in subsection

(a) on the employer's written statement to an employee and to file the statement at a time not

required by subsection (a). Every employer shall file an annual report with the Secretary that

contains the information given on each of the employer's written statements to an employee and

other information required by the Secretary. The annual report is due on the same date the

employer's federal information return of federal income taxes withheld from wages is due under

the Code. The report required by this subsection is in lieu of the report required by G.S. 105-154.

(c) Repealed by Session Laws 2002-72, s. 16, effective August 12, 2002. (1959, c. 1259,

s. 1; 1973, c. 476, s. 193; 1989 (Reg. Sess., 1990), c. 945, s. 11; 1993 (Reg. Sess., 1994), c. 679,

s. 8.3; 1997-109, s. 2; 2002-72, s. 16.)


§ 105-163.7. (Effective for taxable years beginning on or after January 1, 2015) Statement

to employees; information to Secretary.

(a) Report to Employee. – Every employer required to deduct and withhold from an

employee's wages under G.S. 105-163.2 shall furnish to the employee in respect to the

remuneration paid by the employer to such employee during the calendar year, on or before

January 31 of the succeeding year, or, if the employment is terminated before the close of the

calendar year, within 30 days after the date on which the last payment of remuneration is made,

duplicate copies of a written statement showing the following:

(1) The employer's name, address, and taxpayer identification number.

(2) The employee's name, address, and social security number.

(3) The total amount of wages or remuneration made.

(4) The total amount deducted and withheld under G.S. 105-163.2.

(b) Report to Secretary. – Every employer shall file an annual report with the Secretary

that contains the information given on each of the employer's written statements to an employee.

The Secretary may require additional information to be included on the report, provided the

Secretary has given a minimum of 90 days' notice of the additional information required. The

annual report is due on or before January 31 of the succeeding year and must be filed in an

electronic format as prescribed by the Secretary. The Secretary may, upon a showing of good

cause, waive the electronic submission requirement. The report required by this subsection is in

lieu of the report required by G.S. 105-154.

(c) Repealed by Session Laws 2002-72, s. 16, effective August 12, 2002. (1959, c. 1259,

s. 1; 1973, c. 476, s. 193; 1989 (Reg. Sess., 1990), c. 945, s. 11; 1993 (Reg. Sess., 1994), c. 679,

s. 8.3; 1997-109, s. 2; 2002-72, s. 16; 2015-259, s. 7.1(a).)

§ 105-163.8. Liability of withholding agents.

(a) A withholding agent who withholds the proper amount of income taxes under this

Article and pays the withheld amount to the Secretary is not liable to any person for the amount

paid. A withholding agent who fails to withhold the proper amount of income taxes or pay the

amount withheld to the Secretary is liable for the amount of tax not withheld or not paid. A

withholding agent who fails to withhold the amount of income taxes required by this Article or

who fails to pay withheld taxes by the due date for paying the taxes is subject to the penalties

provided in Article 9 of this Chapter.

(b) Repealed by Session Laws 1998-212, s. 29A.14(g). (1959, c. 1259, s. 1; 1973, c. 476,

s. 193; 1989 (Reg. Sess., 1990), c. 945, s. 12; 1997-109, s. 2; 1998-212, s. 29A.14(g).)

§ 105-163.9. Refund of overpayment to withholding agent.

A withholding agent who pays the Secretary more under this Article than the Article requires

the agent to pay may obtain a refund of the overpayment by filing a request for a refund with the

Secretary. No refund is allowed, however, if the withholding agent withheld the amount of the

overpayment from the wages or compensation of the agent's employees or contractors. A

withholding agent must file a request for a refund within the time period set in G.S. 105-241.6.

Interest accrues on a refund as provided in G.S. 105-241.21. (1959, c. 1259, s. 1; 1973, c. 476, s.

193; 1975, c. 74, s. 1; 1981 (Reg. Sess., 1982), c. 1223, s. 3; 1989 (Reg. Sess., 1990), c. 945, s.

13; 1997-109, s. 2; 2007-491, s. 18; 2008-187, s. 15.)

§ 105-163.10. Withheld amounts credited to taxpayer for calendar year.


The amount deducted and withheld under this Article during any calendar year from the

wages or compensation of an individual shall be allowed as a credit to that individual against the

tax imposed by Article 4 of this Chapter for taxable years beginning in that calendar year. The

amount deducted and withheld under this Article during any calendar year from the

compensation of a nonresident entity shall be allowed as a credit to that entity against the tax

imposed by Article 4 of this Chapter for taxable years beginning in that calendar year. If the

nonresident entity is a pass-through entity, the entity shall pass through and allocate to each

owner the owner's share of the credit.

If more than one taxable year begins in the calendar year during which the withholding

occurred, the amount shall be allowed as a credit against the tax for the last taxable year so

beginning. To obtain the credit allowed in this section, the individual or nonresident entity must

file with the Secretary one copy of the withholding statement required by G.S. 105-163.3 or G.S.

105-163.7 and any other information the Secretary requires. (1959, c. 1259, s. 1; 1967, c. 1110, s.

4; 1973, c. 476, s. 193; 1989, c. 728, s. 1.44; 1991 (Reg. Sess., 1992), c. 930, s. 9; 1997-109, s.

2.)


§ 105-163.15. Failure by individual to pay estimated income tax; interest.

(a) In the case of any underpayment of the estimated tax by an individual, the Secretary

shall assess interest in an amount determined by applying the applicable annual rate established

under G.S. 105-241.21 to the amount of the underpayment for the period of the underpayment.

(b) For purposes of subsection (a), the amount of the underpayment shall be the excess of

the required installment, over the amount, if any, of the installment paid on or before the due date

for the installment. The period of the underpayment shall run from the due date for the

installment to whichever of the following dates is the earlier: (i) the fifteenth day of the fourth

month following the close of the taxable year, or (ii) with respect to any portion of the

underpayment, the date on which such portion is paid. A payment of estimated tax shall be

credited against unpaid required installments in the order in which such installments are required

to be paid.

(c) For purposes of this section there shall be four required installments for each taxable

year with the time for payment of the installments as follows:

(1) First installment – April 15 of taxable year;

(2) Second installment – June 15 of taxable year;

(3) Third installment – September 15 of taxable year; and

(4) Fourth installment – January 15 of following taxable year.

(d) Except as provided in subsection (e), the amount of any required installment shall be

twenty-five percent (25%) of the required annual payment. The term "required annual payment"

means the lesser of:

(1) Ninety percent (90%) of the tax shown on the return for the taxable year, or, if

no return is filed, ninety percent (90%) of the tax for that year; or

(2) One hundred percent (100%) of the tax shown on the return of the individual

for the preceding taxable year, if the preceding taxable year was a taxable year

of 12 months and the individual filed a return for that year.

(e) In the case of any required installment, if the individual establishes that the

annualized income installment is less than the amount determined under subsection (d), the


amount of the required installment shall be the annualized income installment, and any reduction

in a required installment resulting from the application of this subsection shall be recaptured by

increasing the amount of the next required installment determined under subsection (d) by the

amount of the reduction and by increasing subsequent required installments to the extent that the

reduction has not previously been recaptured.

In the case of any required installment, the annualized income installment is the excess, if

any, of (i) an amount equal to the applicable percentage of the tax for the taxable year computed

by placing on an annualized basis the taxable income for months in the taxable year ending

before the due date for the installment, over (ii) the aggregate amount of any prior required

installments for the taxable year. The taxable income shall be placed on an annualized basis

under rules prescribed by the Secretary. The applicable percentages for the required installments

are as follows:

(1) First installment – twenty-two and one-half percent (22.5%);

(2) Second installment – forty-five percent (45%);

(3) Third installment – sixty-seven and one-half percent (67.5%); and

(4) Fourth installment – ninety percent (90%).

(f) No interest shall be imposed under subsection (a) if the tax shown on the return for

the taxable year reduced by the tax withheld under this Article is less than the amount set in

section 6654(e) of the Code or if the individual did not have any liability for tax under Part 2 of

Article 4 for the preceding taxable year.

(g) For purposes of this section, the term "tax" means the tax imposed by Part 2 of

Article 4 minus the credits against the tax allowed by this Chapter other than the credit allowed

by this Article. The amount of the credit allowed under this Article for withheld income tax for

the taxable year is considered a payment of estimated tax, and an equal part of that amount is

considered to have been paid on each due date of the taxable year, unless the taxpayer establishes

the dates on which all amounts were actually withheld, in which case the amounts so withheld

are considered payments of estimated tax on the dates on which the amounts were actually

withheld.

(h) If, on or before January 31 of the following taxable year, the taxpayer files a return

for the taxable year and pays in full the amount computed on the return as payable, no interest

shall be imposed under subsection (a) with respect to any underpayment of the fourth required

installment for the taxable year.

(i) Notwithstanding subsections (c), (d), (e), and (h) of this section, an individual who is

a farmer or fisherman for a taxable year is subject to the provisions of this subsection.

(1) One installment. – The individual is required to make only one installment

payment of tax for that taxable year. This installment is due on or before

January 15 of the following taxable year. The amount of the installment

payment must be the lesser of:

a. Sixty-six and two-thirds percent (66 2/3%) of the tax shown on the

return for the taxable year, or, if no return is filed, sixty-six and

two-thirds percent (66 2/3%) of the tax for that year; or

b. One hundred percent (100%) of the tax shown on the return of the

individual for the preceding taxable year, if the preceding taxable year

was a taxable year of 12 months and the individual filed a return for

that year.


(2) Exception. – If, on or before March 1 of the following taxable year, the

taxpayer files a return for the taxable year and pays in full the amount

computed on the return as payable, no interest is imposed under subsection (a)

of this section with respect to any underpayment of the required installment

for the taxable year.

(3) Eligibility. – An individual is a farmer or fisherman for any taxable year if the

individual's gross income from farming or fishing, including oyster farming,

for the taxable year is at least sixty-six and two-thirds percent (66 2/3%) of the

total gross income from all sources for the taxable year, or the individual's

gross income from farming or fishing, including oyster farming, shown on the

return of the individual for the preceding taxable year is at least sixty-six and

two-thirds percent (66 2/3%) of the total gross income from all sources shown

on the return.

(j) In applying this section to a taxable year beginning on any date other than January 1,

there shall be substituted, for the months specified in this section, the months that correspond

thereto. This section shall be applied to taxable years of less than 12 months in accordance with

rules prescribed by the Secretary.

(k) This section shall not apply to any estate or trust. (1959, c. 1259, s. 1; 1963, c. 785,

ss. 3, 4; 1973, c. 476, s. 193; c. 1287, s. 7; 1977, c. 657, s. 5; c. 1114, s. 8; 1985, c. 443, s. 2;

1989, c. 692, s. 7.1; 1991 (Reg. Sess., 1992), c. 950, s. 1; 1997-109, s. 2; 1998-98, s. 71;

1998-212, s. 29A.14(h); 2000-126, s. 4; 2005-276, s. 6.37(l); 2007-491, s. 44(1)a.)

§ 105-163.16. Overpayment refunded.

If the amount of wages or compensation withheld at the source under this Article exceeds the

tax imposed by Article 4 of this Chapter against which the withheld tax is credited under G.S.

105-163.10, the excess is considered an overpayment by the employee or contractor. If the

amount of estimated tax paid under G.S. 105-163.15 exceeds the taxes imposed by Article 4 of

this Chapter against which the estimated tax is credited under the provisions of this Article, the

excess is considered an overpayment by the taxpayer. An overpayment shall be refunded as

provided in Article 9 of this Chapter. (1959, c. 1259, s. 1; 1967, c. 702, s. 2; 1973, c. 476, s. 193;

c. 903, s. 3; 1975, c. 74, s. 2; 1979, c. 801, s. 71; 1981 (Reg. Sess., 1982), c. 1223, s. 1; 1983, c.

663, s. 2; c. 865, s. 1; 1985, c. 443, s. 3; 1987 (Reg. Sess., 1988), c. 1063, s. 2; 1989, c. 728, s.

1.45; 1989 (Reg. Sess., 1990), c. 814, s. 23; 1991, c. 45, s. 22; 1993, c. 315, s. 2; 1997-109, s. 2.)


§§ 105-163.19 through 105-163.21. Repealed by Session Laws 1967, c. 1110, s. 4.

§ 105-163.22. Reciprocity.

The Secretary may, with the approval of the Attorney General, enter into agreements with the

taxing authorities of states having income tax withholding statutes that govern the amounts to be

withheld from the wages and salaries of residents of the other state or states under the provisions

of this Article when the other state or states grant similar treatment to the residents of this State.

The agreements may provide for recognition of the anticipated tax credits allowed under the

provisions of G.S. 105-153.9 in determining the amounts to be withheld. (1959, c. 1259, s. 1;

1973, c. 476, s. 193; 1997-109, s. 2; 2014-3, s. 14.28.)


§ 105-163.23. Withholding from federal employees.

The Secretary is designated as the proper official to make request for and enter into

agreements with the Secretary of the Treasury of the United States to provide for the compliance

with this Article by the head of each department or agency of the United States in withholding of

State income taxes from wages of federal employees and paying the same to this State. The

Secretary is authorized, empowered, and directed to request and enter into these agreements.

(1959, c. 1259, s. 1; 1973, c. 476, s. 193; 1997-109, s. 2.)

§ 105-163.24. Construction of Article.

This Article shall be liberally construed in pari materia with Article 4 of this Chapter to the

end that taxes levied by Article 4 shall be collected with respect to wages and compensation by

withholding agents' withholding of the appropriate amounts and by individuals' payments in

installments of income tax with respect to income not subject to withholding. (1959, c. 1259, s.

1; 1997-109, s. 2.)

Article 4B.

Filing of Declarations of Estimated Income Tax and Installment Payments of Estimated Income

Tax by Corporations.

§§ 105-163.25 through 105-163.37: Recodified as §§ 105-163.38 through 105-163.44.

Article 4C.

Filing of Declarations of Estimated Income Tax and Installment Payments of Estimated Income

Tax by Corporations.


The following definitions apply in this Article, unless the context requires otherwise:


(1a) Corporation. – Defined in section 7701 of the Code.

(2) Estimated tax. – The amount of income tax the corporation estimates as the

amount imposed by Article 4 for the taxable year.

(3) Fiscal year. – An accounting period of 12 months ending on the last day of

any month other than December.


(5) Taxable year. – The calendar year or fiscal year used as a basis to determine

net income under Article 4. If no fiscal year has been established, "fiscal year"

means the calendar year. In the case of a return made for a fractional part of

the year under Article 4, or under rules prescribed by the Secretary, "taxable

year" means the period for which the return is made. (1959, c. 1259, s. 1A;

1973, c. 476, s. 193; 1983, c. 713, s. 86; 1989 (Reg. Sess., 1990), c. 984, s. 15;

1991 (Reg. Sess., 1992), c. 922, s. 8; 1993, c. 12, s. 10.)

§ 105-163.39. Declarations of estimated income tax required.


(a) Declaration Required. – Every corporation subject to taxation under Article 4 shall

submit a declaration of estimated tax to the Secretary. This declaration is due at the time

established in G.S. 105-163.40, and payment of the estimated tax is due at the time and in the

manner prescribed in that section.

(b) Content. – In the declaration of estimated tax, the corporation shall state its estimated

total net income from all sources for the taxable year, the proportion of its total net income

allocable to this State, its estimated tax, and any other information required by the Secretary.

(c) Amendments to Declaration. – Under rules prescribed by the Secretary, a corporation

may amend a declaration of estimated tax. (1959, c. 1259, s. 1A; 1973, c. 476, s. 193; 1983, c.

713, s. 86.)

§ 105-163.40. Time for submitting declaration; time and method for paying estimated tax;

form of payment.

(a) Due Dates of Declarations. – Declarations of estimated tax are due at the same time

as the corporation's first installment payment. Installment payments are due as follows:

(1) If, before the 1st day of the 4th month of the taxable year, the corporation's

estimated tax equals or exceeds five hundred dollars ($500.00), the

corporation shall pay the estimated tax in four equal installments on or before

the 15th day of the 4th, 6th, 9th and 12th months of the taxable year.

(2) If, after the last day of the 3rd month and before the 1st day of the 6th month

of the taxable year, the corporation's estimated tax equals or exceeds five

hundred dollars ($500.00), the corporation shall pay the estimated tax in three

equal installments on or before the 15th day of the 6th, 9th and 12th months of

the taxable year.

(3) If, after the last day of the 5th month and before the 1st day of the 9th month


hundred dollars ($500.00), the corporation shall pay the estimated tax in two

equal installments on or before the 15th day of the 9th and 12th months.

(4) If, after the last day of the 8th month and before the 1st day of the 12th month


hundred dollars ($500.00), the corporation shall pay the estimated tax on or

before the 15th day of the 12th month of the taxable year.

(b) Payment of Estimated Tax When Declaration Amended. – When a corporation

submits an amended declaration after making one or more installment payments on its estimated

tax, the amount of each remaining installment shall be the amount that would have been payable

if the estimate in the amended declaration was the original estimate, increased or decreased as

appropriate by the amount computed by dividing:

(1) The absolute value of the difference between:

a. The amount paid and

b. The amount that would have been paid if the estimate in the amended

declaration was the original estimate by

(2) The number of remaining installments.

(c) Short Taxable Year. – Payment of estimated tax for taxable years of less than 12

months shall be made in accordance with rules promulgated by the Secretary.

(d) Form of Payment. – A corporation that is required under the Code to pay its

federal-estimated corporate income tax by electronic funds transfer must pay its State-estimated


tax by electronic funds transfer. (1959, c. 1259, s. 1A; 1973, c. 476, s. 193; 1983, c. 713, s. 86;

1989 (Reg. Sess., 1990), c. 984, s. 16; 1999-389, s. 7.)

§ 105-163.41. Underpayment.

(a) Except as provided in subsection (d), if the amount of estimated tax paid by a

corporation during the taxable year is less than the amount of tax imposed upon the corporation

under Article 4 of this Chapter for the taxable year, the corporation must be assessed interest in

an amount determined by multiplying the amount of the underpayment as determined under

subsection (b), for the period of the underpayment as determined under subsection (c), by the

percentage established as the rate of interest on assessments under G.S. 105-241.21 that is in

effect for the period of the underpayment. For the purpose of this section, the amount of tax

imposed under Article 4 of this Chapter is the net amount after subtracting the credits against the

tax allowed by this Chapter other than the credit allowed by this Article.

(b) The amount of the underpayment shall be the difference between:

(1) The amount of the installment the corporation would have been required to

pay if the corporation's estimated tax equalled ninety percent (90%) of the tax

imposed under Article 4 for the taxable year, assuming the same schedule of

installments, or ninety percent (90%) of the tax imposed for the taxable year if

the corporation made no installment payments; and

(2) The amount, if any, of the corresponding installment timely paid by the

corporation.

(c) The period of the underpayment runs from the date the installment was required to be

paid to the earlier of:

(1) The 15th day of the fourth month following the close of the taxable year, or

(2) With respect to any portion of the underpayment, the date on which the

portion is paid. An installment payment of estimated tax is considered a

payment of any previous underpayment only to the extent the payment

exceeds the amount of the installment determined under subdivision (1) of

subsection (b) for that installment date.

(d) Except as provided in subdivision (5) of this subsection, the interest for

underpayment imposed by this section shall not be imposed if the total amount of all payments of

estimated tax made on or before the last date prescribed for the payment of the installments

equals or exceeds the amount that would have been required to be paid on or before that date if

the estimated tax was equal to the least of:

(1) The tax shown on the return of the corporation for the preceding taxable year,

if the corporation filed a return for the preceding taxable year and the

preceding year was a taxable year of 12 months;

(2) An amount equal to the tax computed at the rates applicable to the taxable

year but otherwise on the basis of the facts shown on the return of the

corporation for, and the law applicable to, the preceding taxable year; or

(3) An amount equal to ninety percent (90%) of the tax for the taxable year

computed by placing on an annualized basis the taxable income:

a. For the first three months of the taxable year, in the case of the

installment required to be paid in the 4th month;


b. For the first three months or for the first five months of the taxable

year, in the case of the installment required to be paid in the 6th

month;

c. For the first six months or for the first eight months of the taxable

year, in the case of the installment required to be paid in the 9th

month; and

d. For the first nine months or for the first 11 months of the taxable year,

in the case of the installment required to be paid in the 12th month of

the taxable year.

(4) For purposes of this subdivision, the taxable income shall be placed on an

annualized basis by multiplying by 12 the taxable income referred to in the

preceding sentence, and dividing the resulting amount by the number of

months in the taxable year (3, 5, 6, 8, 9, or 11 as the case may be) referred to

in that sentence.

(5) In the case of a large corporation, as defined in section 6655 of the Code,

subdivisions (1) and (2) of this subsection shall not apply. (1959, c. 1259, s.

1A; 1973, c. 476, s. 193; 1977, c. 1114, s. 9; 1983, c. 713, s. 86; 1987 (Reg.

Sess., 1988), c. 994, ss. 2, 3; 2001-414, s. 13; 2005-276, s. 6.37(m); 2007-491,

s. 44(1)a; 2013-414, s. 3.)

§ 105-163.42. Repealed by Session Laws 1985 (Regular Session, 1986), c. 820.

§ 105-163.43. Overpayment refunded.

If the amount of estimated tax paid under this Article exceeds the taxes against which the

estimated tax is credited pursuant to this Article, the excess is considered an overpayment by the

taxpayer and shall be refunded as provided in Article 9 of this Chapter. (1959, c. 1259, s. 1A;

1967, c. 1110, s. 5; 1973, c. 476, s. 193; 1983, c. 713, s. 86; 1993, c. 315, s. 1.)


Article 5.

Sales and Use Tax.


Part 1. Title, Purpose and Definitions.

§ 105-164.1. Short title.

This Article shall be known as the "North Carolina Sales and Use Tax Act." (1957, c. 1340,

s. 5; 1998-98, s. 47.)

§ 105-164.2. Purpose.

The taxes herein imposed shall be in addition to all other license, privilege or excise taxes

and the taxes levied by this Article are to provide revenue for the support of the public school

system of this State and for other necessary uses and purposes of the government and State of

North Carolina. (1957, c. 1340, s. 5.)




(1) Advertising and promotional direct mail. – Printed material that meets the

definition of "direct mail" and the primary purpose of which is to attract

public attention to a product, person, business, or organization, or to attempt

to sell, popularize, or secure financial support for a product, person, business,

or organization. As used in this subdivision, "product" means tangible

personal property, digital property, or a service.

(1a) Analytical services. – Testing laboratories that are included in national

industry 541380 of NAICS or medical laboratories that are included in

national industry 621511 of NAICS.

(1b) Ancillary service. – A service associated with or incidental to the provision of

a telecommunications service. The term includes detailed communications

billing, directory assistance, vertical service, and voice mail service. A vertical

service is a service, such as call forwarding, caller ID, three-way calling, and

conference bridging, that allows a customer to identify a caller or manage

multiple calls and call connections.

(1c) through (1e) Reserved for future codification purposes.

(1f) Audio work. – A series of musical, spoken, or other sounds, including a

ringtone.

(1g) Audiovisual work. – A series of related images and any sounds accompanying

the images that impart an impression of motion when shown in succession.

(1h) Aviation gasoline. – Defined in G.S. 105-449.60.

(1i) Bundled transaction. – A retail sale of two or more distinct and identifiable

products, at least one of which is taxable and one of which is exempt, for one

nonitemized price. Products are not sold for one nonitemized price if an

invoice or another sales document made available to the purchaser separately

identifies the price of each product. A bundled transaction does not include

the retail sale of any of the following:

a. A product and any packaging item that accompanies the product and is

exempt under G.S. 105-164.13(23).

b. A sale of two or more products whose combined price varies, or is

negotiable, depending on the products the purchaser selects.

c. A sale of a product accompanied by a transfer of another product with

no additional consideration.

d. A product and the delivery or installation of the product.

e. A product and any service necessary to complete the sale.

(1j) Reserved for future codification purposes.

(1k) Business. – An activity a person engages in or causes another to engage in

with the object of gain, profit, benefit, or advantage, either direct or indirect.

The term does not include an occasional and isolated sale or transaction by a

person who does not claim to be engaged in business.

(1l) Reserved for future codification purposes.

(1m) Cable service. – The one-way transmission to subscribers of video

programming or other programming service and any subscriber interaction

required to select or use the service.


(2) Candy. – A preparation of sugar, honey, or other natural or artificial

sweeteners in combination with chocolate, fruits, nuts, or other ingredients or

flavorings in the form of bars, drops, or pieces that do not require

refrigeration. The term does not include any preparation that contains flour.

(3) Clothing. – All human wearing apparel suitable for general use including

coats, jackets, hats, hosiery, scarves, and shoes.

(4) Clothing accessories or equipment. – Incidental items worn on the person or

in conjunction with clothing including jewelry, cosmetics, eyewear, wallets,

and watches.

(4a) Combined general rate. – The State's general rate of tax set in G.S.

105-164.4(a) plus the sum of the rates of the local sales and use taxes

authorized by Subchapter VIII of this Chapter for every county in this State.

(4b) Computer. – An electronic device that accepts information in digital or similar

form and manipulates it for a result based on a sequence of instructions.

(4c) Computer software. – A set of coded instructions designed to cause a

computer or automatic data processing equipment to perform a task.

(4d) Computer supply. – An item that is considered a "school computer supply"

under the Streamlined Agreement.

(5) Consumer. – A person who stores, uses, or otherwise consumes in this State

tangible personal property, digital property, or a service purchased or received

from a retailer or supplier either within or without this State.


(5b) Custom computer software. – Computer software that is not prewritten

computer software. The term includes a user manual or other documentation

that accompanies the sale of the software.

(5c) Datacenter. – A facility that provides infrastructure for hosting or data

processing services and that has power and cooling systems that are created

and maintained to be concurrently maintainable and to include redundant

capacity components and multiple distribution paths serving the computer

equipment at the facility. Although the facility must have multiple distribution

paths serving the computer equipment, a single distribution path may serve the

computer equipment at any one time. The following definitions apply in this

subdivision:

a. Concurrently maintainable. – Capable of having any capacity

component or distribution element serviced or repaired on a planned

basis without interrupting or impeding the performance of the

computer equipment.

b. Multiple distribution paths. – A series of distribution paths configured

to ensure that failure on one distribution path does not interrupt or

impede other distribution paths.

c. Redundant capacity components. – Components beyond those required

to support the computer equipment.

(5d) Repealed by Session Laws 2009-451, s. 27A.3(d), effective January 1, 2010,

and applicable to sales made on or after that date.


(6) Delivery charges. – Charges imposed by the retailer for preparation and

delivery of personal property or services to a location designated by the

consumer.

(6a) Development tier. – The classification assigned to an area pursuant to G.S.

143B-437.08.

(7) Dietary supplement. – A product that is intended to supplement the diet of

humans and is required to be labeled as a dietary supplement under federal

law, identifiable by the "Supplement Facts" box found on the label.

(7a) Digital code. – A code that gives a purchaser of the code a right to receive an

item by electronic delivery or electronic access. A digital code may be

obtained by an electronic means or by a tangible means. A digital code does

not include a gift certificate or a gift card.

(7c) Direct mail. – Printed material delivered or distributed by the United States

Postal Service or other delivery service to a mass audience or to addresses on

a mailing list provided by the purchaser or at the direction of the purchaser

when the cost of the items is not billed directly to the recipients. The term

includes tangible personal property supplied directly or indirectly by the

purchaser to the direct mail seller for inclusion in the package containing the

printed material. The term does not include multiple items of printed material

delivered to a single address.

(8) Direct-to-home satellite service. – Programming transmitted or broadcast by

satellite directly to the subscribers' premises without the use of ground

equipment or distribution equipment, except equipment at the subscribers'

premises or the uplink process to the satellite.

(8a) Drug. – A compound, substance, or preparation or a component of one of

these that meets any of the following descriptions and is not food, a dietary

supplement, or an alcoholic beverage:

a. Is recognized in the United States Pharmacopoeia, Homeopathic

Pharmacopoeia of the United States, or National Formulary.

b. Is intended for use in the diagnosis, cure, mitigation, treatment, or

prevention of disease.

c. Is intended to affect the structure or function of the body.

(8b) Durable medical equipment. – Equipment that meets all of the conditions of

this subdivision. The term includes repair and replacement parts for the

equipment. The term does not include mobility enhancing equipment.

a. Can withstand repeated use.

b. Primarily and customarily used to serve a medical purpose.

c. Generally not useful to a person in the absence of an illness or injury.

d. Not worn in or on the body.

(8c) Durable medical supplies. – Supplies related to use with durable medical

equipment that are eligible to be covered under the Medicare or Medicaid

program.

(8d) Electronic. – Relating to technology having electrical, digital, magnetic,

wireless, optical, electromagnetic, or similar capabilities.

(8e) Eligible Internet datacenter. – A datacenter that satisfies each of the following

conditions:


a. The facility is used primarily or is to be used primarily by a business

engaged in software publishing included in industry 511210 of NAICS

or an Internet activity included in industry 519130 of NAICS.

b. The facility is comprised of a structure or series of structures located

or to be located on a single parcel of land or on contiguous parcels of

land that are commonly owned or owned by affiliation with the

operator of that facility.

c. The facility is located or to be located in a county that was designated,

at the time of application for the written determination required under

sub-subdivision d. of this subdivision, either an enterprise tier one,

two, or three area or a development tier one or two area pursuant to

G.S. 105-129.3 or G.S. 143B-437.08, regardless of any subsequent

change in county enterprise or development tier status.

d. The Secretary of Commerce has made a written determination that at

least two hundred fifty million dollars ($250,000,000) in private funds

has been or will be invested in real property or eligible business

property, or a combination of both, at the facility within five years

after the commencement of construction of the facility.

(8f) Eligible railroad intermodal facility. – Defined in G.S. 105-129.95.

(8g) Energy Star qualified product. – A product that meets the energy efficient

guidelines set by the United States Environmental Protection Agency and the

United States Department of Energy and is authorized to carry the Energy Star

label.

(9) Engaged in business. – Any of the following:

a. Maintaining, occupying, or using permanently or temporarily, directly

or indirectly, or through a subsidiary or agent, by whatever name

called, any office, place of distribution, sales or sample room,

warehouse or storage place, or other place of business for selling or

delivering tangible personal property, digital property, or a service for

storage, use, or consumption in this State, or permanently or

temporarily, directly or through a subsidiary, having any

representative, agent, sales representative, or solicitor operating in this

State in the selling or delivering. The fact that any corporate retailer,

agent, or subsidiary engaged in business in this State may not be

legally domesticated or qualified to do business in this State is

immaterial.

b. Maintaining in this State, either permanently or temporarily, directly

or through a subsidiary, tangible personal property or digital property

for the purpose of lease or rental.

c. Making a remote sale, if one of the conditions listed in G.S.

105-164.8(b) is met.

d. Shipping wine directly to a purchaser in this State as authorized by

G.S. 18B-1001.1.

(10) Food. – Substances that are sold for ingestion or chewing by humans and are

consumed for their taste or nutritional value. The substances may be in liquid,

concentrated, solid, frozen, dried, or dehydrated form. The term does not


include an alcoholic beverage, as defined in G.S. 105-113.68, or a tobacco

product, as defined in G.S. 105-113.4.

(11) Food sold through a vending machine. – Food dispensed from a machine or

another mechanical device that accepts payment.

(12) Gross sales. – The sum total of the sales price of all retail sales of tangible

personal property, digital property, and services.

(13) Hub. – Either of the following:

a. An interstate air courier's hub is the interstate air courier's principal

airport within the State for sorting and distributing letters and packages

and from which the interstate air courier has, or expects to have upon

completion of construction, no less than 150 departures a month under

normal operating conditions.

b. An interstate passenger air carrier's hub is the airport in this State that

meets both of the following conditions:

1. The air carrier has allocated to the airport under G.S. 105-338

more than sixty percent (60%) of its aircraft value apportioned

to this State.

2. The majority of the air carrier's passengers boarding at the

airport are connecting from other airports rather than

originating at that airport.

(14) In this (the) State. – Within the exterior limits of the State of North Carolina,

including all territory within these limits owned by or ceded to the United

States of America.

(14a) Information service. – A service that generates, acquires, stores, processes, or

retrieves data and information and delivers it electronically to or allows

electronic access by a consumer whose primary purpose for using the service

is to obtain the processed data or information.

(14c) Interstate air business. – An interstate air courier, an interstate freight air

carrier, or an interstate passenger air carrier.

(15) Interstate air courier. – A person whose primary business is the furnishing of

air delivery of individually addressed letters and packages for compensation,

in interstate commerce, except by the United States Postal Service.

(15b) Interstate freight air carrier. – A person whose primary business is scheduled

freight air transportation, as defined in the North American Industry

Classification System adopted by the United States Office of Management and

Budget, in interstate commerce.

(16) Interstate passenger air carrier. – A person whose primary business is

scheduled passenger air transportation, as defined in the North American

Industry Classification System adopted by the United States Office of

Management and Budget, in interstate commerce.


(16b) Jet fuel. – Defined in G.S. 105-449.60.

(17) Lease or rental. – A transfer of possession or control of tangible personal

property for a fixed or indeterminate term for consideration. The term does

not include any of the following:


a. A transfer of possession or control of property under a security

agreement or deferred payment plan that requires the transfer of title

upon completion of the required payments.

b. A transfer of possession or control of property under an agreement that

requires the transfer of title upon completion of required payments and

payment of an option price that does not exceed the greater of one

hundred dollars ($100.00) or one percent (1%) of the total required

payments.

c. The providing of tangible personal property along with an operator for

a fixed or indeterminate period of time if the operator is necessary for

the equipment to perform as designed. For the purpose of this

sub-subdivision, an operator must do more than maintain, inspect, or

set up the tangible personal property.

(17a) Repealed by Session Laws 2009-451, s. 27A.3(d), effective January 1, 2010,


(18) Repealed by Session Laws 2009-451, s. 27A.3(g), effective August 7, 2009.

(19) Major recycling facility. – Defined in G.S. 105-129.25.

(20) Manufactured home. – A structure that is designed to be used as a dwelling

and is manufactured in accordance with the specifications for manufactured

homes issued by the United States Department of Housing and Urban

Development.

a., b. Repealed by Session Laws 2003-400, s. 13, effective January 1, 2004,

and applicable to sales of modular homes on and after that date.

(21) Mobile telecommunications service. – A radio communication service carried

on between mobile stations or receivers and land stations and by mobile

stations communicating among themselves and includes all of the following:

a. Both one-way and two-way radio communication services.

b. A mobile service that provides a regularly interacting group of base,

mobile, portable, and associated control and relay stations for private

one-way or two-way land mobile radio communications by eligible

users over designated areas of operation.

c. Any service for which a federal license is required in a personal

communications service.

(21a) Mobility enhancing equipment. – Equipment that meets all of the conditions

of this subdivision. The term includes repair and replacement parts for the

equipment. The term does not include durable medical equipment.

a. Primarily and customarily used to provide or increase the ability of an

individual to move from one place to another.

b. Appropriate for use either in a home or motor vehicle.

c. Not generally used by a person with normal mobility.

d. Not normally provided on a motor vehicle by a motor vehicle

manufacturer.

(21b) Modular home. – A factory-built structure that is designed to be used as a

dwelling, is manufactured in accordance with the specifications for modular

homes under the North Carolina State Residential Building Code, and bears a


seal or label issued by the Department of Insurance pursuant to G.S.

143-139.1.

(21c) Modular homebuilder. – A person who furnishes for consideration a modular

home to a purchaser that will occupy the modular home. The purchaser can be

a person that will lease or rent the unit as real property.

(22) Moped. – A vehicle that has two or three wheels, no external shifting device,

and a motor that does not exceed 50 cubic centimeters piston displacement

and cannot propel the vehicle at a speed greater than 30 miles per hour on a

level surface.

(23) Motor vehicle. – A vehicle that is designed primarily for use upon the

highways and is either self-propelled or propelled by a self-propelled vehicle,

but does not include:

a. A moped.

b. Special mobile equipment.

c. A tow dolly that is exempt from motor vehicle title and registration

requirements under G.S. 20-51(10) or (11).

d. A farm tractor or other implement of husbandry.

e. A manufactured home, a mobile office, or a mobile classroom.

f. Road construction or road maintenance machinery or equipment.

(23a) NAICS. – Defined in G.S. 105-228.90.

(24) Net taxable sales. – The gross sales of the business of a retailer taxed under

this Article after deducting exempt sales and nontaxable sales.

(25) Nonresident retail or wholesale merchant. – A person who does not have a

place of business in this State, is registered for sales and use tax purposes in a

taxing jurisdiction outside the State, and is engaged in the business of

acquiring, by purchase, consignment, or otherwise, tangible personal property

or digital property and selling the property outside the State or in the business

of providing a service.

(25a) Operator. – A person provided with the lease or rental of tangible personal

property or a motor vehicle to operate, drive, or maneuver the tangible

personal property or motor vehicle and whose presence, skill, knowledge, and

expertise are necessary to bring about a desired or appropriate effect. The

person must do more than calibrate, test, analyze, research, probe, or monitor

the tangible personal property or motor vehicle.

(25b) Other direct mail. – Any direct mail that is not advertising and promotional

mail regardless of whether advertising and promotional direct mail is included

in the same mailing.

(25c) Over-the-counter drug. – A drug that contains a label that identifies the

product as a drug as required by 21 C.F.R. § 201.66. The label includes either

of the following:

a. A "Drug Facts" panel.

b. A statement of its active ingredients with a list of those ingredients

contained in the compound, substance, or preparation.


(26a) Place of primary use. – The street address representative of where the use of a

customer's telecommunications service primarily occurs. The street address


must be the customer's residential street address or primary business street

address. For mobile telecommunications service, the street address must be

within the licensed service area of the service provider. If the customer who

contracted with the telecommunications provider for the telecommunications

service is not the end user of the service, the end user is considered the

customer for the purpose of determining the place of primary use.

(26b) Prepaid calling service. – A right that meets all of the following requirements:

a. Authorizes the exclusive purchase of telecommunications service.

b. Must be paid for in advance.

c. Enables the origination of calls by means of an access number,

authorization code, or another similar means, regardless of whether the

access number or authorization code is manually or electronically

dialed.

d. Is sold in predetermined units or dollars whose number or dollar value

declines with use and is known on a continuous basis.

(26c) Prepaid meal plan. – A plan offered by an institution of higher education that

meets all of the following requirements:

a. Entitles a person to food or prepared food.

b. Must be billed or paid for in advance.

c. Provides for predetermined units or unlimited access to food or

prepared food but does not include a dollar value that declines with

use.

(27) Prepaid telephone calling service. – Prepaid calling service or prepaid wireless

calling service.

(27a) Prepaid wireless calling service. – A right that meets all of the following

requirements:

a. Authorizes the purchase of mobile telecommunications service, either

exclusively or in conjunction with other services.

b. Must be paid for in advance.

c. Is sold in predetermined units or dollars whose number or dollar value

declines with use and is known on a continuous basis.

(28) Prepared food. – Food that meets at least one of the conditions of this

subdivision. Prepared food does not include food the retailer sliced,

repackaged, or pasteurized but did not heat, mix, or sell with eating utensils.

a. It is sold in a heated state or it is heated by the retailer.

b. It consists of two or more foods mixed or combined by the retailer for

sale as a single item. This sub-subdivision does not include foods

containing raw eggs, fish, meat, or poultry that require cooking by the

consumer as recommended by the Food and Drug Administration to

prevent food borne illnesses.

c. It is sold with eating utensils provided by the retailer, such as plates,

knives, forks, spoons, glasses, cups, napkins, and straws.

(29) Prescription. – An order, formula, or recipe issued orally, in writing,

electronically, or by another means of transmission by a physician, dentist,

veterinarian, or another person licensed to prescribe drugs.


(29a) Prewritten computer software. – Computer software, including prewritten

upgrades, that is not designed and developed by the author or another creator

to the specifications of a specific purchaser. The term includes software

designed and developed by the author or another creator to the specifications

of a specific purchaser when it is sold to a person other than the specific

purchaser.

(30) Production company. – A person engaged in the business of making original

motion picture, television, or radio images for theatrical, commercial,

advertising, or educational purposes.

(30a) Professional motorsports racing team. – A racing team that satisfies all of the


a. The team is operated for profit.

b. The team does not claim a deduction under section 183 of the Code.

c. The team competes in at least sixty-six percent (66%) of the races

sponsored in a race series in a single season by a motorsports

sanctioning body.

(30b) Prosthetic device. – A replacement, corrective, or supporting device worn on

or in the body that meets one of the conditions of this subdivision. The term

includes repair and replacement parts for the device.

a. Artificially replaces a missing portion of the body.

b. Prevents or corrects a physical deformity or malfunction.

c. Supports a weak or deformed portion of the body.

(31) Protective equipment. – Items for human wear and designed as protection of

the wearer against injury or disease or as protection against damage or injury

of other persons or property but not suitable for general use including

breathing masks, face shields, hard hats, and tool belts.

(32) (Effective until March 1, 2016) Purchase. – Acquired for consideration,

regardless of any of the following:

a. Whether the acquisition was effected by a transfer of title or

possession, or both, or a license to use or consume.

b. Whether the transfer was absolute or conditional regardless of the

means by which it was effected.

c. Whether the consideration is a price or rental in money or by way of

exchange or barter.

(32) (Effective March 1, 2016) Purchase. – Acquired for consideration or

consideration in exchange for a service, regardless of any of the following:

a. Whether the acquisition was effected by a transfer of title or

possession, or both, or a license to use or consume.

b. Whether the transfer was absolute or conditional regardless of the

means by which it was effected.

c. Whether the consideration is a price or rental in money or by way of

exchange or barter.

(33) Purchase price. – The term has the same meaning as the term "sales price"

when applied to an item subject to use tax.

(33a) Qualified aircraft. – An aircraft with a maximum take-off weight of more than

9,000 pounds but not in excess of 15,000 pounds.


(33b) Qualified jet engine. – An engine certified pursuant to Part 33 of Title 14 of

the Code of Federal Regulations.

(33c) Qualifying datacenter. – A datacenter that satisfies each of the following

conditions:

a. The datacenter meets the wage standard and health insurance

requirements of G.S. 143B-437.08A.

b. The Secretary of Commerce has made a written determination that at

least seventy-five million dollars ($75,000,000) in private funds has

been or will be invested by one or more owners, users, or tenants of

the datacenter within five years of the date the owner, user, or tenant

of the datacenter makes its first real or tangible property investment in

the datacenter on or after January 1, 2012. Investments in real or

tangible property in the datacenter made prior to January 1, 2012, may

not be included in the investment required by this subdivision.

(33d) (Effective until March 1, 2016) Real property contractor. – A person that

contracts to perform construction, reconstruction, installation, repair, or any

other service with respect to real property and to furnish tangible personal

property to be installed or applied to real property in connection with the

contract and the labor to install or apply the tangible personal property that

becomes part of real property. The term includes a general contractor, a

subcontractor, or a builder for purposes of G.S. 105-164.4H.

(33d) (Effective March 1, 2016) Real property contractor. – A person that contracts

to perform construction, reconstruction, installation, repair, or any other

service with respect to real property and to furnish tangible personal property

to be installed or applied to real property in connection with the contract and

the labor to install or apply the tangible personal property that becomes part of

real property. The term includes a general contractor, a subcontractor, or a

builder for purposes of G.S. 105-164.4H. The term does not include a person

engaged in retail trade.

(33e) Related member. – Defined in G.S. 105-130.7A.

(33f) Remote sale. – A sale of tangible personal property or digital property ordered

by mail, by telephone, via the Internet, or by another similar method, to a

purchaser who is in this State at the time the order is remitted, from a retailer

who receives the order in another state and delivers the property or causes it to

be delivered to a person in this State. It is presumed that a resident of this

State who remits an order was in this State at the time the order was remitted.

(33g) (Effective March 1, 2016) Repair, maintenance, and installation services. –

The term includes the activities listed in this subdivision:

a. To keep or attempt to keep tangible personal property or a motor

vehicle in working order to avoid breakdown and prevent repairs.

b. To calibrate, restore, or attempt to calibrate or restore tangible personal

property or a motor vehicle to proper working order or good condition.

This activity may include replacing or putting together what is torn or

broken.

c. To troubleshoot, identify, or attempt to identify the source of a

problem for the purpose of determining what is needed to restore


tangible personal property or a motor vehicle to proper working order

or good condition.

d. To install or apply tangible personal property except tangible personal

property installed or applied by a real property contractor pursuant to a

real property contract.

(34) Retail sale or sale at retail. – The sale, lease, or rental for any purpose other

than for resale, sublease, or subrent.

(34a) (Effective March 1, 2016) Retail trade. – A trade in which the majority of

revenue is from retailing tangible personal property, digital property, or

services to consumers. The term includes activities of a person properly

classified in NAICS sector 44-45, buying goods for resale, and rendering

services incidental to the sale of merchandise. The term typically includes

maintaining an inventory and may include the provision of repair,

maintenance, and installation services. Not all activities provided in this

subdivision are required for a trade to be considered retail trade.

(35) (Effective until March 1, 2016) Retailer. – Any of the following persons:

a. A person engaged in business of making sales at retail, offering to

make sales at retail, or soliciting sales at retail of tangible personal

property, digital property, or services for storage, use, or consumption

in this State. When the Secretary finds it necessary for the efficient

administration of this Article to regard any sales representatives,

solicitors, representatives, consignees, peddlers, or truckers as agents

of the dealers, distributors, consignors, supervisors, employers, or

persons under whom they operate or from whom they obtain the items

sold by them regardless of whether they are making sales on their own

behalf or on behalf of these dealers, distributors, consignors,

supervisors, employers, or persons, the Secretary may so regard them

and may regard the dealers, distributors, consignors, supervisors,

employers, or persons as "retailers" for the purpose of this Article.

b. A person engaged in business of delivering, erecting, installing, or

applying tangible personal property for use in this State, regardless of

whether the property is permanently affixed to real property or other

tangible personal property.

c. A person engaged in business of making a remote sale, if one of the

conditions listed in G.S. 105-164.8(b) is met.

d. A person, other than a facilitator, required to collect the tax levied

under G.S. 105-164.4(a).

(35) (Effective March 1, 2016) Retailer. – Any of the following persons:

a. A person engaged in business of making sales at retail, offering to

make sales at retail, or soliciting sales at retail of tangible personal

property, digital property, or services for storage, use, or consumption

in this State. When the Secretary finds it necessary for the efficient

administration of this Article to regard any sales representatives,

solicitors, representatives, consignees, peddlers, or truckers as agents

of the dealers, distributors, consignors, supervisors, employers, or

persons under whom they operate or from whom they obtain the items


sold by them regardless of whether they are making sales on their own

behalf or on behalf of these dealers, distributors, consignors,

supervisors, employers, or persons, the Secretary may so regard them

and may regard the dealers, distributors, consignors, supervisors,

employers, or persons as "retailers" for the purpose of this Article.

b. A person engaged in business of delivering, erecting, installing, or

applying tangible personal property for use in this State that does not

become part of real property pursuant to the tax imposed under G.S.

105-164.4(a)(13). property unless the person is one or more of the

following:

1. A person that solely operates as a real property contractor.

2. A person whose only business activity is providing repair,

maintenance, and installation services where the person's

activities do not otherwise meet the definition of a retail trade.

c. A person engaged in business of making a remote sale, if one of the

conditions listed in G.S. 105-164.8(b) is met.

d. A person, other than a facilitator, required to collect the tax levied

under G.S. 105-164.4(a).

(35a) Retailer-contractor. – A person that acts as a retailer when it sells tangible

personal property at retail and as a real property contractor when it performs

real property contracts.

(35c) Ringtone. – A digitized sound file that is downloaded onto a device and that

may be used to alert the user of the device with respect to a communication.

(36) Sale or selling. – The transfer for consideration of title, license to use or

consume, or possession of tangible personal property or digital property or the

performance for consideration of a service. The transfer or performance may

be conditional or in any manner or by any means. The term includes the

following:

a. Fabrication of tangible personal property for consumers by persons

engaged in business who furnish either directly or indirectly the

materials used in the fabrication work.

b. Furnishing or preparing tangible personal property consumed on the

premises of the person furnishing or preparing the property or

consumed at the place at which the property is furnished or prepared.

c. A transaction in which the possession of the property is transferred but

the seller retains title or security for the payment of the consideration.

d. A lease or rental.

e. Transfer of a digital code.

(37) Sales price. – The total amount or consideration for which tangible personal

property, digital property, or services are sold, leased, or rented. The

consideration may be in the form of cash, credit, property, or services. The

sales price must be valued in money, regardless of whether it is received in

money.

a. The term includes all of the following:

1. The retailer's cost of the property sold.


2. The cost of materials used, labor or service costs, interest,

losses, all costs of transportation to the retailer, all taxes

imposed on the retailer, and any other expense of the retailer.

3. Charges by the retailer for any services necessary to complete

the sale.

4. Delivery charges.

5. Installation charges.

6. Repealed by Session Laws 2007-244, s. 1, effective October 1,

2007.

7. Credit for trade-in.

8. Discounts that are reimbursable by a third party and can be

determined at the time of sale through any of the following:

I. Presentation by the consumer of a coupon or other

documentation.

II. Identification of the consumer as a member of a group

eligible for a discount.

III. The invoice the retailer gives the consumer.

b. The term does not include any of the following:

1. Discounts that are not reimbursable by a third party, are

allowed by the retailer, and are taken by a consumer on a sale.

2. Interest, financing, and carrying charges from credit extended

on the sale, if the amount is separately stated on the invoice,

bill of sale, or a similar document given to the consumer.

3. Any taxes imposed directly on the consumer that are separately

stated on the invoice, bill of sale, or similar document given to

the consumer.

(37a) Satellite digital audio radio service. – A radio communication service in which

audio programming is digitally transmitted by satellite to an earth-based

receiver, whether directly or via a repeater station.

(37b) School instructional material. – Written material commonly used by a student

in a course of study as a reference and to learn the subject being taught. The

following is an all-inclusive list:

a. Reference books.

b. Reference maps and globes.

c. Textbooks.

d. Workbooks.

(37d) School supply. – An item that is commonly used by a student in the course of

study and is considered a "school supply" or "school art supply" under the

Streamlined Agreement.

(38) Secretary. – The Secretary of the North Carolina Department of Revenue.

(38b) (Effective until March 1, 2016) Service contract. – A contract where the

obligor under the contract agrees to maintain or repair tangible personal

property or a motor vehicle. Examples of a service contract include a warranty

agreement other than a manufacturer's warranty or dealer's warranty provided

at no charge to the purchaser, an extended warranty agreement, a maintenance

agreement, a repair contract, or a similar agreement or contract.


(38b) (Effective March 1, 2016) Service contract. – A contract where the obligor

under the contract agrees to maintain or repair tangible personal property,

regardless of whether the property becomes a part of or is affixed to real

property, or a motor vehicle. Examples of a service contract include a

warranty agreement other than a manufacturer's warranty or dealer's warranty

provided at no charge to the purchaser, an extended warranty agreement, a

maintenance agreement, a repair contract, or a similar agreement or contract.

(39) Repealed by Session Laws 2002-16, s. 3, effective August 1, 2002, and

applicable to taxable services reflected on bills dated after August 1, 2002.

(40) Soft drink. – A nonalcoholic beverage that contains natural or artificial

sweeteners. The term does not include beverages that contain one or more of

the following:

a. Milk or milk products.

b. Soy, rice, or similar milk substitutes.

c. More than fifty percent (50%) vegetable or fruit juice.

(41) Special mobile equipment. – Any of the following:

a. A vehicle that has a permanently attached crane, mill, well-boring

apparatus, ditch-digging apparatus, air compressor, electric welder,

feed mixer, grinder, or other similar apparatus is driven on the

highway only to get to and from a nonhighway job and is not designed

or used primarily for the transportation of persons or property.

b. A vehicle that has permanently attached special equipment and is used

only for parade purposes.

c. A vehicle that is privately owned, has permanently attached

fire-fighting equipment, and is used only for fire-fighting purposes.

d. A vehicle that has permanently attached playground equipment and is

used only for playground purposes.

(42) Sport or recreational equipment. – Items designed for human use and worn in

conjunction with an athletic or recreational activity that are not suitable for

general use including ballet shoes, cleated athletic shoes, shin guards, and ski

boots.

(43) State agency. – A unit of the executive, legislative, or judicial branch of State

government, such as a department, a commission, a board, a council, or The

University of North Carolina. The term does not include a local board of

education.

(44) Storage. – The keeping or retention in this State for any purpose, except sale

in the regular course of business, of tangible personal property or digital

property purchased from a retailer. The term does not include a purchaser's

storage of tangible personal property or digital property in any of the

following circumstances:

a. When the purchaser is able to document that at the time the purchaser

acquires the property the property is designated for the purchaser's use

outside the State and the purchaser subsequently takes it outside the

State and uses it solely outside the State.

b. When the purchaser acquires the property to process, fabricate,

manufacture, or otherwise incorporate it into or attach it to other


property for the purchaser's use outside the State and, after

incorporating or attaching the purchased property, the purchaser

subsequently takes the other property outside the State and uses it

solely outside the State.

(45) Repealed by Session Laws 2009-451, s. 27A.3(g), effective August 7, 2009.

(45a) Streamlined Agreement. – The Streamlined Sales and Use Tax Agreement as

amended as of October 30, 2013.

(46) Tangible personal property. – Personal property that may be seen, weighed,

measured, felt, or touched or is in any other manner perceptible to the senses.

The term includes electricity, water, gas, steam, and prewritten computer

software.

(47) Taxpayer. – Any person liable for taxes under this Article.

(48) Telecommunications service. – The electronic transmission, conveyance, or

routing of voice, data, audio, video, or any other information or signals to a

point, or between or among points. The term includes any transmission,

conveyance, or routing in which a computer processing application is used to

act on the form, code, or protocol of the content for purposes of the

transmission, conveyance, or routing, regardless of whether it is referred to as

voice-over Internet protocol or the Federal Communications Commission

classifies it as enhanced or value added. The term does not include the

following:

a. An information service.

b. The sale, installation, maintenance, or repair of tangible personal

property.

c. Directory advertising and other advertising.

d. Billing and collection services provided to a third party.

e. Internet access service.

f. Radio and television audio and video programming service, regardless

of the medium of delivery, and the transmission, conveyance, or

routing of the service by the programming service provider. The term

includes cable service and audio and video programming service

provided by a mobile telecommunications service provider.

g. Ancillary service.

h. Digital property that is delivered or accessed electronically, including

an audio work, an audiovisual work, or any other item subject to tax

under G.S. 105-164.4(a)(6b).

(49) Use. – The exercise of any right, power, or dominion whatsoever over

tangible personal property, digital property, or a service by the purchaser of

the property or service. The term includes withdrawal from storage,

distribution, installation, affixation to real or personal property, and

exhaustion or consumption of the property or service by the owner or

purchaser. The term does not include the following:

a. A sale of property or a service in the regular course of business.

b. A purchaser's use of tangible personal property or digital property in

any of the circumstances that would exclude the storage of the


property from the definition of "storage" in subdivision (44) of this

section.

(50) Use tax. – The tax imposed by Part 2 of this Article.

(50c) Video programming. – Programming provided by, or generally considered

comparable to programming provided by, a television broadcast station,

regardless of the method of delivery.

(51) Wholesale merchant. – A person engaged in the business of any of the

following:

a. Making wholesale sales.

b. Buying or manufacturing tangible personal property, digital property,

or a service and selling it to a registered resident or nonresident retail

or wholesale merchant for resale.

c. Manufacturing, producing, processing, or blending any articles of

commerce and maintaining a store, warehouse, or any other place that

is separate and apart from the place of manufacture or production for

the sale or distribution of the articles, other than bakery products, to

another for the purpose of resale.

(52) Wholesale sale. – A sale of tangible personal property, digital property, or a

service for the purpose of resale. The term includes a sale of digital property

for reproduction into digital or tangible personal property offered for sale. The

term does not include a sale to a user or consumer not for resale or, in the case

of digital property, not for reproduction and sale of the reproduced property.

(1957, c. 1340, s. 5; 1959, c. 1259, s. 5; 1961, c. 1213, s. 1; 1967, c. 1110, s.

6; 1973, c. 476, s. 193; c. 1287, s. 8; 1975, c. 104; c. 275, s. 6; 1979, c. 48, s.

2; c. 71; c. 801, s. 72; 1983, c. 713, ss. 87, 88; 1983 (Reg. Sess., 1984), c.

1097, ss. 4, 5; 1985, c. 23; 1987, c. 27; c. 557, s. 3.1; c. 854, ss. 2, 3; 1987

(Reg. Sess., 1988), c. 1044, s. 3; c. 1096, ss. 1-3; 1989, c. 692, s. 3.2; 1989

(Reg. Sess., 1990), c. 813, s. 13; 1991, c. 45, s. 15; c. 79, ss. 1, 3; c. 689, s.

190.1(a); 1991 (Reg. Sess., 1992), c. 949, s. 3; 1993, c. 354, s. 16; c. 484, s. 1;

c. 507, s. 1; 1995 (Reg. Sess., 1996), c. 649, s. 2; 1996, 2nd Ex. Sess., c. 14,

ss. 13, 14; 1997-6, s. 7; 1997-370, s. 1; 1997-426, s. 4; 1998-22, s. 4; 1998-55,

ss. 7, 13; 1998-98, ss. 13.1(a), 106; 1999-337, s. 28(a), (b); 1999-360, s.

6(a)-(c); 1999-438, s. 4; 2000-153, s. 4; 2000-173, s. 9; 2001-347, ss. 2.1-2.7;

2001-414, s. 14; 2001-424, s. 34.17(b); 2001-430, ss. 1, 2; 2001-476, s. 18(a);

2001-489, s. 3(a); 2002-16, ss. 1, 2, 3; 2002-170, s. 6; 2003-284, s. 45.2;

2003-400, ss. 13, 14; 2003-402, s. 12; 2004-124, s. 32B.3; 2004-170, ss. 18,

19; 2005-276, ss. 33.2, 33.3; 2006-33, s. 1; 2006-66, ss. 24.10(a), 24.17(a);

2006-151, s. 2; 2006-162, s. 5(a); 2006-168, ss. 4.1, 4.3; 2006-252, ss. 2.25(a),

(a1), (c), 2.26; 2007-244, s. 1; 2007-323, ss. 31.14(a), 31.20(a), 31.23(b);

2008-107, s. 28.12(a); 2009-445, s. 11; 2009-451, s. 27A.3(d), (g); 2010-91,

ss. 1, 2; 2010-166, s. 3.3; 2011-330, ss. 15(a), (b), 31(c); 2012-79, s. 2.7;

2013-316, s. 6(a); 2013-414, ss. 8, 23(a); 2014-3, ss. 4.1(a), 6.1(a), 7.1(a),

14.7; 2015-6, ss. 2.1(b), 2.10; 2015-241, s. 32.18(a); 2015-259, ss. 3(a), 6(a),

4.1(a), 4.2(a); 2015-268, s. 10.1(g).)

Part 2. Taxes Levied.


§ 105-164.4. Tax imposed on retailers.

(a) A privilege tax is imposed on a retailer engaged in business in the State at the

percentage rates of the retailer's net taxable sales or gross receipts, listed in this subsection. The

general rate of tax is four and three-quarters percent (4.75%). The percentage rates are as

follows:

(1) The general rate of tax applies to the sales price of each item or article of

tangible personal property that is sold at retail and is not subject to tax under

another subdivision in this section.

(1a) The general rate applies to the sales price of each of the following items sold

at retail, including all accessories attached to the item when it is delivered to

the purchaser:

a. A manufactured home.

b. A modular home. The sale of a modular home to a modular

homebuilder is considered a retail sale. A person who sells a modular

home at retail is allowed a credit against the tax imposed by this

subdivision for sales or use tax paid to another state on tangible

personal property incorporated in the modular home. The retail sale of

a modular home occurs when a modular home manufacturer sells a

modular home to a modular homebuilder or directly to the end user of

the modular home.

c. An aircraft. The maximum tax is two thousand five hundred dollars

($2,500) per article.

d. A qualified jet engine.

(1b) The rate of three percent (3%) applies to the sales price of each boat sold at

retail, including all accessories attached to the boat when it is delivered to the

purchaser. The maximum tax is one thousand five hundred dollars ($1,500)

per article.

(1c), (1d) and (1e) Repealed by Session Laws 2005-276, s. 33.4(b), effective January

1, 2006.

(1f) Repealed by Session Laws 2013-316, s. 4.1(c), effective July 1, 2014, and

applicable to gross receipts billed on or after July 1, 2014.

a. Repealed by Session Laws 2007-397, s. 10(b), effective October 1,

2007, and applicable to sales occurring on or after that date.

b. Repealed by Session Laws 2006-66, s. 24.19(a), effective July 1, 2007,


c. Repealed by Session Laws 2007-397, s. 10(b), effective October 1,

2007, and applicable to sales occurring on or after that date.

(1g) Repealed by Session Laws 2004-110, s. 6.1, effective October 1, 2004, and

applicable to sales of electricity made on or after that date.

(1h) Expired pursuant to Session Laws 2004-110, s. 6.4, effective for sales made

on or after October 1, 2007.

(1i) Repealed by Session Laws 2007-397, s. 10(a), effective October 1, 2007, and

applicable to sales occurring on or after that date.

(1j) Repealed by Session Laws 2007-397, s. 10(f), effective July 1, 2010, and

applicable to sales occurring on or after that date.


(2) The applicable percentage rate applies to the gross receipts derived from the

lease or rental of tangible personal property by a person who is engaged in

business of leasing or renting tangible personal property, or is a retailer and

leases or rents property of the type sold by the retailer. The applicable

percentage rate is the rate and the maximum tax, if any, that applies to a sale

of the property that is leased or rented. A person who leases or rents property

shall also collect the tax imposed by this section on the separate retail sale of

the property.

(3) The general rate applies to the gross receipts derived from the rental of an

accommodation. These rentals are taxed in accordance with G.S. 105-164.4F.

(4) Every person engaged in the business of operating a dry cleaning, pressing, or

hat-blocking establishment, a laundry, or any similar business, engaged in the

business of renting clean linen or towels or wearing apparel, or any similar

business, or engaged in the business of soliciting cleaning, pressing, hat

blocking, laundering or linen rental business for any of these businesses, is

considered a retailer under this Article. A tax at the general rate of tax is

levied on the gross receipts derived by these retailers from services rendered

in engaging in any of the occupations or businesses named in this subdivision.

The tax imposed by this subdivision does not apply to receipts derived from

coin, token, or card-operated washing machines, extractors, and dryers. The

tax imposed by this subdivision does not apply to gross receipts derived from

services performed for resale by a retailer that pays the tax on the total gross

receipts derived from the services.

(4a) Repealed by Session Laws 2013-316, s. 4.1(c), effective July 1, 2014, and

applicable to gross receipts billed on or after July 1, 2014.

(4b) A person who sells tangible personal property at a specialty market or other

event, other than the person's own household personal property, is considered

a retailer under this Article. A tax at the general rate of tax is levied on the

sales price of each article sold by the retailer at the specialty market or other

event. The term "specialty market" has the same meaning as defined in G.S.

66-250.

(4c) The combined general rate applies to the gross receipts derived from

providing telecommunications service and ancillary service. A person who

provides telecommunications service or ancillary service is considered a

retailer under this Article. These services are taxed in accordance with G.S.

105-164.4C.

(4d) The general rate applies to the gross receipts derived from the sale or recharge

of prepaid telephone calling service. The tax applies regardless of whether

tangible personal property, such as a card or a telephone, is transferred. The

tax applies to a service that is sold in conjunction with prepaid wireless calling

service. Prepaid telephone calling service is taxable at the point of sale instead

of at the point of use and is sourced in accordance with G.S. 105-164.4B.

Prepaid telephone calling service taxed under this subdivision is not subject to

tax as a telecommunications service.

(5) Repealed by Session Laws 1998-212, s. 29A.1(a), effective May 1, 1999.


(6) The combined general rate applies to the gross receipts derived from

providing video programming to a subscriber in this State. A cable service

provider, a direct-to-home satellite service provider, and any other person

engaged in the business of providing video programming is considered a

retailer under this Article.

(6a) The general rate applies to the gross receipts derived from providing satellite

digital audio radio service. For services received by a mobile or portable

station, the service is sourced to the subscriber's business or home address. A

person engaged in the business of providing satellite digital audio radio

service is a retailer under this Article.

(6b) The general rate applies to the sales price of digital property that is sold at

retail and that is listed in this subdivision, is delivered or accessed

electronically, is not considered tangible personal property, and would be

taxable under this Article if sold in a tangible medium. The tax applies

regardless of whether the purchaser of the item has a right to use it

permanently or to use it without making continued payments. The tax does not

apply to a service that is taxed under another subdivision of this subsection or

to an information service. The following property is subject to tax under this

subdivision:

a. An audio work.

b. An audiovisual work.

c. A book, a magazine, a newspaper, a newsletter, a report, or another

publication.

d. A photograph or a greeting card.

(7) The combined general rate applies to the sales price of antique spirituous

liquor and spirituous liquor other than mixed beverages. As used in this

subdivision, the terms "antique spirituous liquor", "spirituous liquor", and

"mixed beverage" have the meanings provided in G.S. 18B-101.

(8) Repealed by Session Laws 2015-259, s. 4.2(b), effective October 1, 2015, and

applicable to sales made on or after that date.

(9) The combined general rate applies to the gross receipts derived from sales of

electricity and piped natural gas.

(10) The general rate of tax applies to the gross receipts derived from an admission

charge to an entertainment activity. Gross receipts derived from an admission

charge to an entertainment activity are taxable in accordance with G.S.

105-164.4G.

(11) The general rate of tax applies to the sales price of or the gross receipts

derived from a service contract. A service contract is taxed in accordance with

G.S. 105-164.4I.

(12) The general rate of tax applies to the sales price of or gross receipts derived

from a prepaid meal plan. A bundle that includes a prepaid meal plan is

taxable in accordance with G.S. 105-164.4D.

(13) The general rate of tax applies to the sales price of tangible personal property

sold to a real property contractor for use by the real property contractor in

erecting structures, building on, or otherwise improving, altering, or repairing

real property. These sales are taxed in accordance with G.S. 105-164.4H.


(14), (14a) Expired pursuant to Session Laws 2014-39, s. 1(e), effective July 1, 2015.

(15) The combined general rate applies to the gross receipts derived from the sale

of aviation gasoline and jet fuel.

(16) (Effective March 1, 2016 – see notes) The general rate applies to the sales

price of or the gross receipts derived from repair, maintenance, and

installation services.

(b) The tax levied in this section shall be collected from the retailer and paid by him at

the time and in the manner as hereinafter provided. A person engaging in business as a retailer

shall pay the tax required on the net taxable sales of the business at the rates specified when

proper books are kept showing separately the gross proceeds of taxable and nontaxable sales of

items subject to tax under subsection (a) of this section in a form that may be accurately and

conveniently checked by the Secretary or the Secretary's duly authorized agent. If the records are

not kept separately, the tax shall be paid on the gross sales of the business and the exemptions

and exclusions provided by this Article are not allowed. The tax levied in this section is in

addition to all other taxes whether levied in the form of excise, license, privilege, or other taxes.

(c) Certificate of Registration. – Before a person may engage in business as a retailer or a

wholesale merchant in this State, the person must obtain a certificate of registration from the

Department in accordance with G.S. 105-164.29. A facilitator that is liable for tax under G.S.

105-164.4F must obtain a certificate of registration from the Department in accordance with G.S.

105-164.29. (1957, c. 1340, s. 5; 1959, c. 1259, s. 5; 1961, c. 826, s. 2; 1963, c. 1169, ss. 3, 11;

1967, c. 1110, s. 6; c. 1116; 1969, c. 1075, s. 5; 1971, c. 887, s. 1; 1973, c. 476, s. 193; c. 1287, s.

8; 1975, c. 752; 1977, c. 903; 1977, 2nd Sess., c. 1218; 1979, c. 17, s. 1; c. 22; c. 48, s. 1; c. 527,

s. 1; c. 801, s. 73; 1981, c. 984, ss. 1, 2; 1981 (Reg. Sess., 1982), cc. 1207, 1273; 1983, c. 510; c.

713, ss. 89, 93; c. 805, ss. 1, 2; 1983 (Reg. Sess., 1984), c. 1065, ss. 1, 2, 4; c. 1097, ss. 6, 13;

1985, c. 704; 1985 (Reg. Sess., 1986), c. 925; c. 1005; 1987, c. 557, ss. 4, 5; c. 800, ss. 2, 3; c.

854, s. 1; 1987 (Reg. Sess., 1988), c. 1044, s. 4; 1989, c. 692, ss. 3.1, 3.3, 8.4(8); c. 770, s. 74.4;

1989 (Reg. Sess., 1990), c. 813, ss. 14, 15; 1991, c. 598, s. 5; c. 689, s. 311; c. 690, s. 1; 1993, c.

372, s. 1; c. 484, s. 2; 1995, c. 17, s. 6; c. 477, s. 1; 1996, 2nd Ex. Sess., c. 13, ss. 1.1, 9.1, 9.2;

1997-475, s. 1.1; 1998-22, s. 5; 1998-55, ss. 8, 14; 1998-98, ss. 13.2, 48(a), (b); 1998-121, ss. 3,

5; 1998-197, s. 1; 1998-212, s. 29A.1(a); 1999-337, ss. 29, 30; 1999-360, s. 3(a), (b); 1999-438,

s. 1; 2000-140, s. 67(a); 2001-424, ss. 34.13(a), 34.17(a), 34.23(b), 34.25(a); 2001-430, ss. 3, 4,

5; 2001-476, ss. 17(b)-(d), (f); 2001-487, ss. 67(b), 122(a)-(c); 2002-16, s. 4; 2003-284, s. 38.1;

2003-400, s. 15; 2004-110, ss. 6.1, 6.2, 6.3; 2005-144, s. 9.1; 2005-276, ss. 33.1, 33.4(a), (b);

2006-33, ss. 2, 11; 2006-66, ss. 24.1(a), (b), (c), 24.19(a), (b); 2006-151, s. 3; 2007-145, s. 9(a);

2007-323, ss. 31.2(a), (b), 31.16.3(h), 31.16.4(g); 2007-397, s. 10(a)-(f); 2009-451, s. 27A.2(b),

(e); 2010-31, s. 31.6(a); 2010-123, s. 10.2; 2011-330, s. 16; 2013-316, ss. 3.1(a), 4.1(c), (e), 5(b),

6(b); 2013-414, ss. 9, 40; 2014-3, ss. 4.1(b), 5.1(a), (f), 6.1(b), 7.1(b), 8.1(a), 14.8; 2014-39, s.

1(a); 2015-6, s. 2.1(b); 2015-98, s. 1(h); 2015-241, s. 32.18(b); 2015-259, ss. 4.1(b), 4.2(b).)

§ 105-164.4A: Repealed by Session Laws 2005-276, s. 33.5, effective January 1, 2006.

§ 105-164.4B. Sourcing principles.

(a) General Principles. – The following principles apply in determining where to source

the sale of a product. These principles apply regardless of the nature of the product, except as

otherwise noted in this section:


(1) When a purchaser receives a product at a business location of the seller, the

sale is sourced to that business location.

(2) When a purchaser or purchaser's donee receives a product at a location

specified by the purchaser and the location is not a business location of the

seller, the sale is sourced to the location where the purchaser or the

purchaser's donee receives the product.

(3) When subdivisions (1) and (2) of this subsection do not apply, the sale is

sourced to the location indicated by an address for the purchaser that is

available from the business records of the seller that are maintained in the

ordinary course of the seller's business when use of this address does not

constitute bad faith.

(4) When subdivisions (1), (2), and (3) of this subsection do not apply, the sale is

sourced to the location indicated by an address for the purchaser obtained

during the consummation of the sale, including the address of a purchaser's

payment instrument, if no other address is available, when use of this address

does not constitute bad faith.

(5) When subdivisions (1), (2), (3), and (4) of this subsection do not apply,

including the circumstance in which the seller is without sufficient

information to apply the rules, the location will be determined based on the

following:

a. Address from which tangible personal property was shipped,

b. Address from which the digital good or the computer software

delivered electronically was first available for transmission by the

seller, or

c. Address from which the service was provided.

(b) Periodic Rental Payments. – When a lease or rental agreement requires recurring

periodic payments, the payments are sourced as follows:

(1) For leased or rented property, the first payment is sourced in accordance with

the principles set out in subsection (a) of this section and each subsequent

payment is sourced to the primary location of the leased or rented property for

the period covered by the payment. This subdivision applies to all property

except a motor vehicle, an aircraft, transportation equipment, and a utility

company railway car.

(2) For leased or rented property that is a motor vehicle or an aircraft but is not

transportation equipment, all payments are sourced to the primary location of

the leased or rented property for the period covered by the payment.

(3) For leased or rented property that is transportation equipment, all payments

are sourced in accordance with the principles set out in subsection (a) of this

section.

(4) For a railway car that is leased or rented by a utility company and would be

transportation equipment if it were used in interstate commerce, all payments

are sourced in accordance with the principles set out in subsection (a) of this

section.

(c) Transportation Equipment Defined. – As used in the section, the term "transportation

equipment" means any of the following used to carry persons or property in interstate commerce:

a locomotive, a railway car, a commercial motor vehicle as defined in G.S. 20-4.01, or an


aircraft. The term includes a container designed for use on the equipment and a component part

of the equipment.

(d) Exceptions. – This section does not apply to the following:

(1) Telecommunications services. – Telecommunications services are sourced in

accordance with G.S. 105-164.4C.

(2) Direct mail. – Direct mail is sourced in accordance with G.S. 105-164.4E.

(3) Florist wire sale. – A florist wire sale is sourced to the business location of the

florist that takes an order for the sale. A "florist wire sale" is a sale in which a

retail florist takes a customer's order and transmits the order to another retail

florist to be filled and delivered.

(e) Accommodations. – The rental of an accommodation, as defined in G.S.

105-164.4(a)(3), is sourced to the location of the accommodation.

(f) Digital Property. – A purchaser receives digital property when the purchaser takes

possession of the property or makes first use of the property, whichever comes first.

(g) Prepaid Meal Plan. – The gross receipts derived from a prepaid meal plan are sourced

to the location where the food or prepared food is available to be consumed by the person.

(h) Admissions. – The gross receipts derived from an admission charge, as defined in

G.S. 105-164.4G, are sourced in accordance with G.S. 105-164.4G. (2001-347, s. 2.9; 2002-16,

s. 5; 2003-284, s. 45.3; 2004-170, s. 20; 2006-33, s. 3; 2006-66, s. 24.13(a); 2008-187, s. 42;

2009-445, s. 12; 2010-31, s. 31.6(b); 2010-123, s. 10.2; 2011-330, s. 29; 2012-79, s. 2.8;

2013-414, s. 23(b); 2014-3, ss. 4.1(c), 5.1(b).)

§ 105-164.4C. Telecommunications service and ancillary service.

(a) General. – The gross receipts derived from providing telecommunications service or

ancillary service in this State are taxed at the rate set in G.S. 105-164.4(a)(4c).

Telecommunications service is provided in this State if the service is sourced to this State under

the sourcing principles set out in subsections (a1) and (a2) of this section. Ancillary service is

provided in this State if the telecommunications service to which it is ancillary is provided in this

State. The definitions and provisions of the federal Mobile Telecommunications Sourcing Act

apply to the sourcing and taxation of mobile telecommunications services.

(a1) General Sourcing Principles. – The following general sourcing principles apply to

telecommunications services. If a service falls within one of the exceptions set out in subsection

(a2) of this section, the service is sourced in accordance with the exception instead of the general

principle.

(1) Flat rate. – A telecommunications service that is not sold on a call-by-call

basis is sourced to this State if the place of primary use is in this State.

(2) General call-by-call. – A telecommunications service that is sold on a

call-by-call basis and is not a postpaid calling service is sourced to this State

in the following circumstances:

a. The call both originates and terminates in this State.

b. The call either originates or terminates in this State and the

telecommunications equipment from which the call originates or

terminates and to which the call is charged is located in this State. This

applies regardless of where the call is billed or paid.

(3) Postpaid. – A postpaid calling service is sourced to the origination point of the

telecommunications signal as first identified by either the seller's


telecommunications system or, if the system used to transport the signal is not

the seller's system, by information the seller receives from its service provider.

(a2) Sourcing Exceptions. – The following telecommunications services and products are

sourced in accordance with the principles set out in this subsection:

(1) Mobile. – Mobile telecommunications service is sourced to the place of

primary use, unless the service is prepaid wireless calling service or is

air-to-ground radiotelephone service. Air-to-ground radiotelephone service is

a postpaid calling service that is offered by an aircraft common carrier to

passengers on its aircraft and enables a telephone call to be made from the

aircraft. The sourcing principle in this subdivision applies to a service or

product provided as an adjunct to mobile telecommunications service if the

charge for the service or product is included within the term "charges for

mobile telecommunications services" under the federal Mobile

Telecommunications Sourcing Act.

(2) Prepaid. – Prepaid telephone calling service is sourced in accordance with

G.S. 105-164.4B.

(3) Private. – Private telecommunications service is sourced in accordance with


(b) Repealed by Session Laws 2006-33, s. 4, effective January 1, 2007.

(c) (1) through (10) Repealed by Session Laws 2006-33, s. 4, effective January 1, 2007.

(11) Repealed by Session Laws 2005-276, s. 33.7, effective October 1, 2005.

(12) through (16) Repealed by Session Laws 2006-33, s. 4, effective January 1, 2007.

(d) Recodified as G.S. 105-164.4D by Session Laws 2006-151, s. 4, effective January 1,

2007.

(e) Private Line. – The gross receipts derived from private telecommunications service

are sourced as follows:

(1) If all the customer's channel termination points are located in this State, the

service is sourced to this State.

(2) If all the customer's channel termination points are not located in this State

and the service is billed on the basis of channel termination points, the charge

for each channel termination point located in this State is sourced to this State.


and the service is billed on the basis of channel mileage, the following applies:

a. A charge for a channel segment between two channel termination

points located in this State is sourced to this State.

b. Fifty percent (50%) of a charge for a channel segment between a

channel termination point located in this State and a channel

termination point located in another state is sourced to this State.


and the service is not billed on the basis of channel termination points or

channel mileage, a percentage of the charge for the service is sourced to this

State. The percentage is determined by dividing the number of channel

termination points in this State by the total number of channel termination

points.

(f) Call Center Cap. – The gross receipts tax on telecommunications service that

originates outside this State, terminates in this State, and is provided to a call center that has a


direct pay permit issued by the Department under G.S. 105-164.27A may not exceed fifty

thousand dollars ($50,000) a calendar year. This cap applies separately to each legal entity.

(g) Credit. – A taxpayer who pays a tax legally imposed by another state on a

telecommunications service taxable under this section is allowed a credit against the tax imposed

in this section.


(1) Ancillary service. – Defined in G.S. 105-164.3.

(1a) Call-by-call basis. – A method of charging for a telecommunications service

whereby the price of the service is measured by individual calls.

(2) Call center. – Defined in G.S. 105-164.27A.

(3) Mobile telecommunications service. – Defined in G.S. 105-164.3.

(4) Place of primary use. – Defined in G.S. 105-164.3.

(5) Postpaid calling service. – A telecommunications service that is charged on a

call-by-call basis and is obtained by making payment at the time of the call

either through the use of a credit or payment mechanism, such as a bank card,

travel card, credit card, or debit card, or by charging the call to a telephone

number that is not associated with the origination or termination of the

telecommunications service. A postpaid calling service includes a service that

meets all the requirements of a prepaid telephone calling service, except the

exclusive use requirement.

(6) Prepaid telephone calling service. – Defined in G.S. 105-164.3.

(7) Private telecommunications service. – Telecommunications service that

entitles a subscriber of the service to exclusive or priority use of a

communications channel or group of channels.

(8) Telecommunications service. – Defined in G.S. 105-164.3. (2001-430, s. 6;

2001-487, ss. 67(a), (c), 69(b); 2002-16, s 10; 2002-16, ss. 6, 7, 8, 9, 11, 14;

2003-416, s. 16(a); 2005-276, ss. 33.6, 33.7; 2006-33, s. 4; 2006-151, s. 4;

2011-330, s. 17; 2013-414, s. 41.)

§ 105-164.4D. Bundled transactions.

(a) Tax Application. – Tax applies to the sales price of a bundled transaction unless one

of the following applies:

(1) Fifty percent (50%) test. – All of the products in the bundle are tangible

personal property, the bundle includes one or more of the exempt products

listed in this subdivision, and the price of the taxable products in the bundle

does not exceed fifty percent (50%) of the price of the bundle:

a. Food exempt under G.S. 105-164.13B.

b. A drug exempt under G.S. 105-164.13(13).

c. Medical devices, equipment, or supplies exempt under G.S.

105-164.13(12).

(2) Allocation. – The bundle includes a service, and the retailer determines an

allocated price for each product in the bundle based on a reasonable allocation

of revenue that is supported by the retailer's business records kept in the

ordinary course of business. In this circumstance, tax applies to the allocated

price of each taxable product in the bundle.


(3) Ten percent (10%) test. – The price of the taxable products in the bundle does

not exceed ten percent (10%) of the price of the bundle, and no other

subdivision in this subsection applies.

(4) Prepaid meal plan. – The bundle includes a prepaid meal plan and a dollar

value that declines with use. In this circumstance, tax applies to the allocated

price of the prepaid meal plan. The tax applies to items purchased with the

dollar value that declines with use as the dollar value is presented for

payment.

(5) Tuition, room, and meals. – The bundle includes tuition, room, and meals

offered by an institution of higher education. In this circumstance, tax applies

to the allocated price of the meals. The institution determines the allocated

price for meals based on a reasonable allocation of revenue that is supported

by the institution's business records kept in the ordinary course of business.

(b) Determining Threshold. – A retailer of a bundled transaction subject to this section

may use either the retailer's cost price or the retailer's sales price to determine if the transaction

meets the fifty percent (50%) test or the ten percent (10%) test set out in subdivisions (a)(1) and

(a)(3) of this section. A retailer may not use a combination of cost price and sales price to make

this determination. If a bundled transaction subject to subdivision (a)(3) of this section includes a

service contract, the retailer must use the full term of the contract in determining whether the

transaction meets the threshold set in the subdivision. (2006-151, ss. 4, 5; 2007-244, s. 2;

2014-3, s. 4.1(d).)

§ 105-164.4E. Direct Mail.

(a) Advertising and Promotional Direct Mail. – The following sourcing principles apply

to advertising and promotional direct mail.

(1) To the location where the direct mail is delivered if it is purchased pursuant to

a direct pay permit issued under G.S. 105-164.27A(a1), or if it is purchased

with an exemption certificate claiming direct mail and bearing the direct mail

permit number issued under G.S. 105-164.27A(a1).

(2) To the location where the direct mail is delivered if the purchaser provides the

seller with information to show the jurisdictions to which the direct mail is to

be delivered.

(3) To the location from which the direct mail was shipped if subdivision (1) or

(2) of this subsection does not apply.

(b) Other Direct Mail. – The following sourcing principles apply to other direct mail:

(1) To the location indicated by an address for the purchaser that is available from

the business records of the seller that are maintained in the ordinary course of

the seller's business when use of this address does not constitute bad faith.

(2) To the jurisdictions where the direct mail is delivered if it is purchased

pursuant to a direct pay permit issued under G.S. 105-164.27A(a1), or if it is

purchased with an exemption certificate claiming direct mail and bearing the

direct mail permit number issued under G.S. 105-164.27A(a1).

(c) Relief From Liability. – In the absence of bad faith, a seller is relieved of:

(1) All obligations to collect, pay, or remit any tax on any direct mail transaction

where the purchaser issues a direct pay permit issued under G.S.

105-164.27A(a1), or if it is purchased with an exemption certificate claiming


direct mail and bearing the direct mail permit number issued under G.S.

105-164.27A(a1).

(2) Further obligation to collect any additional tax on the sale of advertising and

promotional direct mail where the seller sourced the sale according to delivery

information provided by the purchaser. (2013-414, s. 23(c).)

§ 105-164.4F. Accommodation rentals.

(a) Definition. – The following definitions apply in this section:

(1) Accommodation. – A hotel room, a motel room, a residence, a cottage, or a

similar lodging facility for occupancy by an individual.

(2) Facilitator. – A person who is not a rental agent and who contracts with a

provider of an accommodation to market the accommodation and to accept

payment from the consumer for the accommodation.

(3) Rental agent. – The term includes a real estate broker, as defined in G.S.

93A-2.

(b) Tax. – The gross receipts derived from the rental of an accommodation are taxed at

the general rate set in G.S. 105-164.4. Gross receipts derived from the rental of an

accommodation include the sales price of the rental of the accommodation. The sales price of the

rental of an accommodation is determined as if the rental were a rental of tangible personal

property. The sales price of the rental of an accommodation marketed by a facilitator includes

charges designated as facilitation fees and any other charges necessary to complete the rental.

(c) Facilitator Transactions. – A facilitator must report to the retailer with whom it has a

contract the sales price a consumer pays to the facilitator for an accommodation rental marketed

by the facilitator. A retailer must notify a facilitator when an accommodation rental marketed by

the facilitator is completed, and the facilitator must send the retailer the portion of the sales price

the facilitator owes the retailer and the tax due on the sales price no later than 10 days after the

end of each calendar month. A facilitator that does not send the retailer the tax due on the sales

price is liable for the amount of tax the facilitator fails to send. A facilitator is not liable for tax

sent to a retailer but not remitted by the retailer to the Secretary. Tax payments received by a

retailer from a facilitator are held in trust by the retailer for remittance to the Secretary. A retailer

that receives a tax payment from a facilitator must remit the amount received to the Secretary. A

retailer is not liable for tax due but not received from a facilitator. The requirements imposed by

this section on a retailer and a facilitator are considered terms of the contract between the retailer

and the facilitator.

(d) Rental Agent. – A person who, by written contract, agrees to be the rental agent for

the provider of an accommodation is considered a retailer under this Article and is liable for the

tax imposed by this section. The liability of a rental agent for the tax imposed by this section

relieves the provider of the accommodation from liability.

(e) Exemptions. – The tax imposed by this section does not apply to the following:

(1) A private residence, cottage, or similar accommodation that is rented for

fewer than 15 days in a calendar year other than a private residence, cottage,

or similar accommodation listed with a real estate broker or agent.

(2) An accommodation supplied to the same person for a period of 90 or more

continuous days.


(3) An accommodation arranged or provided to a person by a school, camp, or

similar entity where a tuition or fee is charged to the person for enrollment in

the school, camp, or similar entity. (2014-3, s. 8.1(b).)

§ 105-164.4G. Entertainment activity.

(a) Definition. – The following definitions apply in this section:

(1) Admission charge. – Gross receipts derived for the right to attend an

entertainment activity. The term includes a charge for a single ticket, a

multi-occasion ticket, a seasonal pass, and an annual pass; a membership fee

that provides for admission; a cover charge; a surcharge; a convenience fee, a

processing fee, a facility charge, a facilitation fee, or similar charge; or any

other charges included in gross receipts derived from admission.

(2) Amenity. – A feature that increases the value or attractiveness of an

entertainment activity that allows a person access to items that are not subject

to tax under this Article and that are not available with the purchase of

admission to the same event without the feature. The term includes parking

privileges, special entrances, access to areas other than general admission,

mascot visits, and merchandise discounts. The term does not include any

charge for food, prepared food, and alcoholic beverages subject to tax under

this Article.

(3) Entertainment activity. – An activity listed in this subdivision:

a. A live performance or other live event of any kind, the purpose of

which is for entertainment.

b. A movie, motion picture, or film.

c. A museum, a cultural site, a garden, an exhibit, a show, or a similar

attraction.

d. A guided tour at any of the activities listed in sub-subdivision c. of this

subdivision.

(4) Facilitator. – A person who accepts payment of an admission charge to an

entertainment activity and who is not the operator of the venue where the

entertainment activity occurs.

(b) Tax. – The gross receipts derived from an admission charge to an entertainment

activity are taxed at the general rate set in G.S. 105-164.4. The tax is due and payable by the

retailer in accordance with G.S. 105-164.16. For purposes of the tax imposed by this section, the

retailer is the applicable person listed below:

(1) The operator of the venue where the entertainment activity occurs, unless the

retailer and the facilitator have a contract between them allowing for dual

remittance, as provided in subsection (d) of this section.

(2) The person that provides the entertainment and that receives admission

charges directly from a purchaser.

(c) Facilitator. – A facilitator must report to the retailer with whom it has a contract the

admission charge a consumer pays to the facilitator for an entertainment activity. The facilitator

must send the retailer the portion of the gross receipts the facilitator owes the retailer and the tax

due on the gross receipts derived from an admission charge no later than 10 days after the end of

each calendar month. A facilitator that does not send the retailer the tax due on the gross receipts

derived from an admission charge is liable for the amount of tax the facilitator fails to send to the


retailer. A facilitator is not liable for tax sent to a retailer but not remitted by the retailer to the

Secretary. Tax payments received by a retailer from a facilitator are held in trust by the retailer

for remittance to the Secretary. A retailer that receives a tax payment from a facilitator must

remit the amount received to the Secretary. A retailer is not liable for tax due but not received

from a facilitator. The requirements imposed by this subsection on a retailer and a facilitator are

considered terms of the contract between the retailer and the facilitator.

(d) Dual Remittance. – The tax due on the gross receipts derived from an admission

charge may be partially reported and remitted to the operator of the venue for remittance to the

Department and partially reported and remitted by the facilitator directly to the Department. The

portion of the tax not reported and remitted to the operator of the venue must be reported and

remitted directly by the facilitator to the Department. A facilitator that elects to remit tax under

the dual remittance option is required to obtain a certificate of registration in accordance with

G.S. 105-164.29. A facilitator is subject to the provisions of Article 9 of this Chapter.

(e) Exceptions. – The tax imposed by this section does not apply to the following:

(1) An amount paid for the right to participate in sporting activities. Examples of

these types of charges include bowling fees, golf green fees, and gym

memberships.

(2) Tuition, registration fees, or charges to attend instructional seminars,

conferences, or workshops for educational purposes.

(3) A political contribution.

(4) A charge for lifetime seat rights, lease, or rental of a suite or box for an

entertainment activity, provided the charge is separately stated on an invoice

or similar billing document given to the purchaser at the time of sale.

(5) An amount paid solely for transportation.

(f) Exemptions. – The sale at retail and the use, storage, or consumption in this State of

the following gross receipts derived from an admission charge to an entertainment activity are

specifically exempt from the tax imposed by this Article:

(1) The portion of a membership charge that is deductible as a charitable

contribution under section 170 of the Code.

(2) A donation that is deductible as a charitable contribution under section 170 of

the Code.

(3) Charges for an amenity. If charges for amenities are separately stated on a

billing document given to the purchaser at the time of the sale, then the tax

does not apply to the separately stated charges for amenities. If charges for

amenities are not separately stated on the billing document given to the

purchaser at the time of the sale, then the transaction is a bundled transaction

and taxed in accordance with G.S. 105-164.4D except that G.S.

105-164.4D(a)(3) does not apply.

(4) An event that is sponsored by an elementary or secondary school. For

purposes of this exemption, the term "school" is an entity regulated under

Chapter 115C of the General Statutes.

(5) An event sponsored solely by a nonprofit entity that is exempt from tax under

Article 4 of this Chapter if all of the following conditions are met:

a. The entire proceeds of the activity are used exclusively for the entity's

nonprofit purposes.


b. The entity does not declare dividends, receive profits, or pay salary or

other compensation to any members or individuals.

c. The entity does not compensate any person for participating in the

event, performing in the event, placing in the event, or producing the

event. For purposes of this subdivision, the term "compensate" means

any remuneration included in a person's gross income as defined in


(g) Sourcing. – An admission charge to an entertainment activity is sourced to the

location where admission to the entertainment activity may be gained by a person. When the

location where admission may be gained is not known at the time of the receipt of the gross

receipts for an admission charge, the sourcing principles in G.S. 105-164.4B(a) apply. (2014-3,

s. 5.1(c); 2015-6, s. 2.11.)

§ 105-164.4H. Real property contractors.

(a) Applicability. – A real property contractor is the consumer of the tangible personal

property that the real property contractor installs or applies for others and that becomes part of

real property. A retailer engaged in business in the State shall collect tax on the sales price of the

tangible personal property sold at retail to a real property contractor unless a statutory exemption

in G.S. 105-164.13 or G.S. 105-164.13E applies. Where a real property contractor purchases

tangible personal property for storage, use, or consumption in this State and the tax due is not

paid at the time of purchase, the provisions of G.S. 105-164.6 apply except as provided in

subsection (b) of this section.

(b) Retailer-Contractor. – This section applies to a retailer-contractor when the

retailer-contractor acts as a real property contractor. A retailer-contractor that purchases tangible

personal property to be installed or affixed to real property may purchase items exempt from tax

under a certificate of exemption pursuant to G.S. 105-164.28 provided the retailer-contractor also

purchases inventory items from the seller for resale. When the tangible personal property is

withdrawn from inventory and installed or affixed to real property, use tax must be accrued and

paid on the retailer-contractor's purchase price of the tangible personal property. Tangible

personal property that the retailer-contractor withdraws from inventory for use that does not

become part of real property is also subject to the tax imposed by this Article.

If a retailer-contractor subcontracts any part of the real property contract, tax is payable by

the subcontractor on the subcontractor's purchase of the tangible personal property that is

installed or affixed to real property in fulfilling the contract. The retailer-contractor, the

subcontractor, and the owner of the real property are jointly and severally liable for the tax. The

liability of a retailer-contractor, a subcontractor, or an owner who did not purchase the property

is satisfied by receipt of an affidavit from the purchaser certifying that the tax has been paid.

(c) Erroneous Collection if Separately Stated. – An invoice or other documentation

issued to a consumer at the time of the sale by a real property contractor shall not separately state

any amount for tax. Any amount for tax separately stated on an invoice or other documentation

given to a consumer by a real property contractor is an erroneous collection and must be remitted

to the Secretary, and the provisions of G.S. 105-164.11(a)(2) do not apply. (2014-3, s. 7.1(c);

2015-6, s. 2.1(b).)

§ 105-164.4I. Service contracts.


(a) Tax. – The sales price of or the gross receipts derived from a service contract or the

renewal of a service contract sold at retail is subject to the general rate of tax set in G.S.

105-164.4 and is sourced in accordance with the sourcing principles in G.S. 105-164.4B. The

retailer of a service contract is required to collect the tax due at the time of the retail sale of the

contract and is liable for payment of the tax. The tax is due and payable in accordance with G.S.

105-164.16.

The retailer of a service contract is the applicable person listed below:

(1) When a service contract is sold at retail to a purchaser by the obligor under the

contract, the obligor is the retailer.

(2) When a service contract is sold at retail to a purchaser by a facilitator on

behalf of the obligor under the contract, the facilitator is the retailer unless the

provisions of subdivision (3) of this subsection apply.

(3) When a service contract is sold at retail to a purchaser by a facilitator on

behalf of the obligor under the contract and there is an agreement between the

facilitator and the obligor that states the obligor will be liable for the payment

of the tax, the obligor is the retailer. The facilitator must send the retailer the

tax due on the sales price of or gross receipts derived from the service contract

no later than 10 days after the end of each calendar month. A facilitator that

does not send the retailer the tax due on the sales price or gross receipts is

liable for the amount of tax the facilitator fails to send. A facilitator is not

liable for tax sent to a retailer but not remitted by the retailer to the Secretary.

Tax payments received by a retailer from a facilitator are held in trust by the

retailer for remittance to the Secretary. A retailer that receives a tax payment

from a facilitator must remit the amount received to the Secretary. A retailer is

not liable for tax due but not received from a facilitator. The requirements

imposed by this subdivision on a retailer and a facilitator are considered terms

of the agreement between the retailer and the facilitator.

(b) Exemptions. – The tax imposed by this section does not apply to the sales price of or

the gross receipts derived from a service contract applicable to any of the following items:

(1) (Effective until March 1, 2016) An item exempt from tax under this Article,

other than a motor vehicle exempt from tax under G.S. 105-164.13(32).

(1) (Effective March 1, 2016) An item exempt from tax under this Article.

(2) A transmission, distribution, or other network asset contained on

utility-owned land, right-of-way, or easement.

(3) A transmission, an engine, rear-end gears, and any other item purchased by a

professional motorsports racing team or a related member of a team for which

the team may receive a sales tax refund under G.S. 105-164.14A(a)(5). This

subdivision expires January 1, 2020.

(4) An item subject to tax under Article 5F of Chapter 105 of the General

Statutes.

(5) A qualified aircraft or a qualified jet engine.

(c) (Effective until March 1, 2016) Exceptions. – The tax does not apply to the sales

price of or the gross receipts derived from a service contract for tangible personal property sold

at retail that is or will become a part of real property unless the service contract is sold by the

obligor or by a third party or facilitator on behalf of the obligor at the same time as the item of

tangible personal property covered in the service contract. The tax imposed by this section does


not apply to a security or similar monitoring contract for real property or to a renewal of a

service contract where the tangible personal property becomes a part of or affixed to real

property prior to the effective date of the renewal.

(c) (Effective March 1, 2016) Exceptions. – The tax imposed by this section does not

apply to a security or similar monitoring contract for real property.

(d) Basis of Reporting. – A retailer who sells or derives gross receipts from a service

contract must report those sales on an accrual basis of accounting, notwithstanding that the

retailer reports tax on the cash basis for other sales at retail. The tax on the sales price of or the

gross receipts derived from a service contract is due at the time of the retail sale, notwithstanding

any portion that may be financed. If the sales price of or the gross receipts derived from the

service contract is financed in whole or in part, the financed amount of the sales price of or the

gross receipts derived from the service contract included in each payment is exempt from sales

tax if the amount is separately stated in the contract and on the billing statement or other

documentation provided to the purchaser at the time of the sale.

(e) Definition. – For purposes of this section, the term "facilitator" means a person who

contracts with the obligor of the service contract to market the service contract and accepts

payment from the purchaser for the service contract. (2014-3, s. 6.1(c); 2015-241, s. 32.18(c);

2015-259, ss. 4.2(c), 5(a), 6(c).)

§ 105-164.5: Repealed by Session Laws 1998-121, s. 2, as amended by Session Laws 1998-217,

s. 59.

§ 105-164.5A: Repealed by Session Laws 1961, c. 1213, s. 3.

§ 105-164.6. Complementary use tax.

(a) Tax. – An excise tax at the applicable rate set in G.S. 105-164.4 is imposed on the

products listed below. The applicable rate is the rate and maximum tax, if any, that would apply

to the sale of the product. A product is subject to tax under this section only if it is subject to tax

under G.S. 105-164.4.

(1) Tangible personal property or digital property purchased inside or outside this

State for storage, use, or consumption in this State. This subdivision includes

property that becomes part of a building or another structure.

(2) Tangible personal property or digital property leased or rented inside or

outside this State for storage, use, or consumption in this State.

(3) Services sourced to this State.

(b) Liability. – The tax imposed by this section is payable by the person who purchases,

leases, or rents tangible personal property or digital property or who purchases a service. If the

property purchased becomes a part of a building or other structure in the State and the purchaser

is a contractor or subcontractor, the contractor, the subcontractor, and the owner of the building

are jointly and severally liable for the tax. The liability of a contractor, a subcontractor, or an

owner who did not purchase the property is satisfied by receipt of an affidavit from the purchaser

certifying that the tax has been paid.

(c) Credit. – A credit is allowed against the tax imposed by this section for the following:

(1) The amount of sales or use tax paid on the item to this State, provided the tax

is stated and charged separately on the invoice or other document of the

retailer given to the purchaser at the time of the sale, except as otherwise


provided in G.S. 105-164.7, or provided the retailer remitted the tax

subsequent to the sale and the purchaser obtains such documentation. Payment

of sales or use tax to this State on an item by a retailer extinguishes the

liability of a purchaser for the tax imposed under this section.

(2) The amount of sales or use tax due and paid on the item to another state. If the

amount of tax paid to the other state is less than the amount of tax imposed by

this section, the difference is payable to this State. The credit allowed by this

subdivision does not apply to tax paid to a state that does not grant a similar

credit for sales or use taxes paid in North Carolina.

(d), (e) Repealed by Session Laws 2005-276, s. 33.8, effective October 1, 2005.

(f) Registration. – A person must obtain a certificate of registration in accordance with

G.S. 105-164.29 under any of the following circumstances:

(1) Before the person engages in business in this State selling or delivering

tangible personal property, digital property, or a service for storage, use, or

consumption in this State.

(2) If the person is a facilitator that is liable for tax pursuant to G.S. 105-164.4F.

(g) Repealed by Session Laws 1995, c. 7, s. 1. (1957, c. 1340, s. 5; 1959, c. 1259, s. 5;

1961, c. 826, s. 2; 1967, c. 1110, s. 6; 1973, c. 476, s. 193; 1979, c. 17, s. 2; c. 48, ss. 3, 4; c. 179,

s. 3; c. 527, s. 2; 1979, 2nd Sess., c. 1100, s. 1; c. 1175; 1981, cc. 18, 65; 1983, c. 713, s. 90;

1983 (Reg. Sess., 1984), c. 1065, s. 3; 1989, c. 692, s. 3.4; 1991, c. 689, s. 312; c. 690, s. 3; 1995,

c. 7, s. 1; c. 17, s. 7; 1998-121, s. 4; 1999-438, s. 1.1; 2001-414, s. 15; 2003-416, ss. 17, 24(a);

2005-276, s. 33.8; 2006-162, s. 6; 2009-451, s. 27A.3(h); 2011-330, s. 25(a); 2013-414, s. 10;

2014-3, s. 14.9(a).)

§ 105-164.6A. Voluntary collection of use tax by sellers.

(a) Voluntary Collection Agreements. – The Secretary may enter into agreements with

sellers pursuant to which the seller agrees to collect and remit on behalf of its customers State

and local use taxes due on items of tangible personal property, digital property, or services the

seller sells. For the purpose of this section, a seller is a person who is engaged in the business of

selling tangible personal property, digital property, or services for use in this State and who does

not have sufficient nexus with this State to be required to collect use tax on the sales.

(b) Mandatory Provisions. – The agreements must contain the following provisions:

(1) The seller is not liable for use tax not paid to it by a customer.

(2) A customer's payment of a use tax to the seller relieves the customer of

liability for the use tax.

(3) The seller must remit all use taxes it collects from customers on or before the

due date specified in the agreement, which may not be later than 31 days after

the end of a quarter or other collection period. The collection period cannot be

more often than annually if the seller's State and local tax collections are less

than one thousand dollars ($1,000) in a calendar year.

(4) A seller who fails to remit use taxes collected on behalf of its customers by

the due date specified in the agreement is subject to the interest and penalties

provided in Article 9 of this Chapter with respect to the taxes to the same

extent as if the seller were a retailer and were required to collect use taxes

under this Article.

(c) Optional Provisions. – The agreements may contain the following provisions:


(1) The seller will collect the use tax only on items that are subject to the general

rate of tax.

(2) The seller will collect local use taxes only to the extent they are at the same

rate in every unit of local government in the State.

(3) The seller will remit the tax and file reports in the form prescribed by the

Secretary.

(4) Other provisions establishing the types of transactions on which the seller will

collect tax and prescribing administrative procedures and requirements.

(1996, 2nd Ex. Sess., c. 14, s. 11; 2000-120, s. 4; 2003-284, s. 45.4; 2009-451,

s. 27A.3(i).)

§ 105-164.7. Retailer to collect sales tax from purchaser as trustee for State.

The sales tax imposed by this Article is intended to be passed on to the purchaser of a taxable

item and borne by the purchaser instead of by the retailer. A retailer must collect the tax due on

an item when the item is sold at retail. The tax is a debt from the purchaser to the retailer until

paid and is recoverable at law by the retailer in the same manner as other debts. A retailer is

considered to act as a trustee on behalf of the State when it collects tax from the purchaser of a

taxable item. The tax must be stated and charged separately on the invoices or other documents

of the retailer given to the purchaser at the time of the sale except for either of the following:

(1) Vending machine sales.

(2) Where a retailer displays a statement indicating the sales price includes the

tax. (1957, c. 1340, s. 5; 1973, c. 476, s. 193; 2000-19, s. 1.3; 2006-162, s. 7;

2009-451, s. 27A.3(j); 2012-79, s. 2.9.)

§ 105-164.8. Retailer's obligation to collect tax; remote sales subject to tax.

(a) Obligation. – A retailer is required to collect the tax imposed by this Article

notwithstanding any of the following:

(1) That the purchaser's order or the contract of sale is delivered, mailed, or

otherwise transmitted by the purchaser to the retailer at a point outside this

State as a result of solicitation by the retailer through the medium of a

catalogue or other written advertisement.

(2) That the purchaser's order or the contract of sale is made or closed by

acceptance or approval outside this State, or before any tangible personal

property or digital property that is part of the order or contract enters this

State.

(3) That the purchaser's order or the contract of sale provides that the property

shall be or is in fact procured or manufactured at a point outside this State and

shipped directly to the purchaser from the point of origin.

(4) That the property is mailed to the purchaser in this State or a point outside this

State or delivered to a carrier outside this State f.o.b. or otherwise and directed

to the purchaser in this State regardless of whether the cost of transportation is

paid by the retailer or by the purchaser.

(5) That the property is delivered directly to the purchaser at a point outside this

State.


(6) Any combination in whole or in part of any two or more of the foregoing

statements of fact, if it is intended that the property purchased be brought to

this State for storage, use, or consumption in this State.

(b) Remote Sales. – A retailer who makes a remote sale is engaged in business in this

State and is subject to the tax levied under this Article if at least one of the following conditions

is met:

(1) The retailer is a corporation engaged in business under the laws of this State

or a person domiciled in, a resident of, or a citizen of, this State.

(2) The retailer maintains retail establishments or offices in this State, whether the

remote sales thus subject to taxation by this State result from or are related in

any other way to the activities of the establishments or offices.

(3) The retailer solicits or transacts business in this State by employees,

independent contractors, agents, or other representatives, whether the remote

sales thus subject to taxation by this State result from or are related in any

other way to the solicitation or transaction of business. A retailer is presumed

to be soliciting or transacting business by an independent contractor, agent, or

other representative if the retailer enters into an agreement with a resident of

this State under which the resident, for a commission or other consideration,

directly or indirectly refers potential customers, whether by a link on an

Internet Web site or otherwise, to the retailer. This presumption applies only if

the cumulative gross receipts from sales by the retailer to purchasers in this

State who are referred to the retailer by all residents with this type of

agreement with the retailer is in excess of ten thousand dollars ($10,000)

during the preceding four quarterly periods. This presumption may be rebutted

by proof that the resident with whom the retailer has an agreement did not

engage in any solicitation in the State on behalf of the seller that would satisfy

the nexus requirement of the United States Constitution during the four

quarterly periods in question.


(5) The retailer, by purposefully or systematically exploiting the market provided

by this State by any media-assisted, media-facilitated, or media-solicited

means, including direct mail advertising, distribution of catalogs,

computer-assisted shopping, television, radio or other electronic media,

telephone solicitation, magazine or newspaper advertisements, or other media,

creates nexus with this State. A nonresident retailer who purchases advertising

to be delivered by television, by radio, in print, on the Internet, or by any other

medium is not considered to be engaged in business in this State based solely

on the purchase of the advertising.

(6) Through compact or reciprocity with another jurisdiction of the United States,

that jurisdiction uses its taxing power and its jurisdiction over the retailer in

support of this State's taxing power.

(7) The retailer consents, expressly or by implication, to the imposition of the tax

imposed by this Article. For purposes of this subdivision, evidence that a

retailer engaged in the activity described in subdivision (5) is prima facie

evidence that the retailer consents to the imposition of the tax imposed by this

Article.


(8) The retailer is a holder of a wine shipper permit issued by the ABC

Commission pursuant to G.S. 18B-1001.1.

(c) Local Tax. – A retailer who is required to collect the tax imposed by this Article must

collect a local use tax on a transaction if a local sales tax does not apply to the transaction. The

sourcing principles in G.S. 105-164.4B determine whether a local sales tax or a local use tax

applies to a transaction. A "local sales tax" is a tax imposed under Chapter 1096 of the 1967

Session Laws or by Subchapter VIII of this Chapter, and a local use tax is a use tax imposed

under that act or Subchapter. (1957, c. 1340, s. 5; 1987 (Reg. Sess., 1988), c. 1096, s. 4; 1991, c.

45, s. 16; 2001-347, s. 2.10; 2003-402, s. 13; 2003-416, s. 24(b), (c); 2009-451, s. 27A.3(a).)

§ 105-164.9. Advertisement to absorb tax unlawful.

Any retailer who shall by any character or public advertisement offer to absorb the tax levied

in this Article or in any manner directly or indirectly advertise that the tax herein imposed is not

considered an element in the price to the purchaser shall be guilty of a Class 1 misdemeanor.

Any violations of the provisions of this section reported to the Secretary shall be reported by him

to the Attorney General of the State to the end that such violations may be brought to the

attention of the solicitor of the court of the county or district whose duty it is to prosecute

misdemeanors in the jurisdiction. It shall be the duty of such solicitor to investigate such alleged

violations and if he finds that this section has been violated prosecute such violators in

accordance with the law. (1957, c. 1340, s. 5; 1973, c. 476, s. 193; 1993, c. 539, s. 704; 1994, Ex.

Sess., c. 24, s. 14(c).)

§ 105-164.10. Retail tax calculation.

For the convenience of the retailer in collecting the tax due under this Article, the Secretary

must prescribe tables that compute the tax due on sales by rounding off the amount of tax due to

the nearest whole cent. The Secretary must issue a separate table for each rate of tax that may

apply to a sale. (1957, c. 1340, s. 5; 1961, c. 826, s. 2; 1973, c. 476, s. 193; 1991, c. 689, s. 313;

2013-316, s. 5(e); 2014-3, s. 5.1(f).)

§ 105-164.11. Excessive and erroneous collections.

(a) Remittance of Overcollections to Secretary. – When tax is collected for any period on

a taxable sale in excess of the total amount that should have been collected or is collected on an

exempt or nontaxable sale, the total amount collected must be remitted to the Secretary. If the

Secretary determines that the seller overcollected the sales tax on a transaction, the Secretary

shall take only one of the actions listed in this subsection. This subsection shall be construed

with other provisions of this Article and given effect so as to result in the payment to the

Secretary of the total amount collected as tax if it is in excess of the amount that should have

been collected.

(1) If the Secretary determines that the seller overcollected tax on a transaction,

the Secretary may allow a refund of the tax. The Secretary may allow the

refund only if the seller gives the purchaser credit for or a refund of the

overcollected tax. The Secretary shall not refund the overcollected tax to the

seller if the seller has elected to offset a use tax liability on a related

transaction with the overcollected sales tax under subdivision (2) of this

subsection.


(2) If the Secretary determines that a seller who overcollected sales tax on a

transaction is instead liable for a use tax on a related transaction, the Secretary

may allow the seller to offset the use tax liability with the overcollected sales

tax. The Secretary shall not allow an offset if the seller has elected to receive a

refund of the overcollected tax under subdivision (1) of this subsection. The

decision by a seller to receive an offset of tax liability rather than a refund of

the overcollected tax does not affect the liability of the seller to the purchaser

for the overcollected tax.

(3) If neither subdivision (1) nor (2) of this subsection applies, the Secretary shall

retain the total amount collected on the transaction.

(b) Refund Procedures First Remedy. – The first course of remedy available to

purchasers seeking a refund of over-collected sales or use taxes from the seller are the customer

refund procedures provided in this Chapter or otherwise provided by administrative rule,

bulletin, or directive on the law issued by the Secretary.

(c) Cause of Action Against Seller. – A cause of action against the seller for

over-collected sales or uses taxes does not accrue until a purchaser has provided written notice to

a seller and the seller has had 60 days to respond. The notice to the seller must contain the

information necessary to determine the validity of the request.

(d) Presumption of Reasonable Business Practice. – In connection with a purchaser's

request from the seller of over-collected sales or use taxes, a seller shall be presumed to have a

reasonable business practice if, in the collection of sales and use taxes, the seller uses either a

provider or a system, including a proprietary system, that is certified by the State and the seller

has remitted to the State all taxes collected less any deductions, credits, or collection allowances.

(e) Reliance on Written Advice. – A seller who requests specific written advice from the

Secretary and who collects and remits sales or use tax in accordance with the written advice the

Secretary gives the seller is not liable to a purchaser for any overcollected sales or use tax that

was collected in accordance with the written advice. Subsection (a) of this section governs when

a seller may obtain a refund for overcollected tax. (1957, c. 1340, s. 5; 1959, c. 1259, s. 5; 1961,

c. 826, s. 2; 1973, c. 476, s. 193; 1991 (Reg. Sess., 1992), c. 1007, s. 4; 2004-22, s. 1; 2009-413,

s. 1; 2011-293, s. 1.)

§ 105-164.11A. Refund of tax paid on rescinded sale or cancellation of service.

(a) Refund. – A retailer is allowed a refund of sales tax remitted on a rescinded sale or

cancelled service. A sale is rescinded when the purchaser returns an item to the retailer and

receives a refund, in whole or in part, of the sales price paid, including a refund of the pro rata

amount of the sales tax based on the taxable amount of the sales price refunded. A service is

cancelled when the service is terminated and the purchaser receives a refund, in whole or in part,

of the sales price paid, including a refund of the pro rata amount of the sales tax paid based on

the taxable amount of the sales price refunded. A retailer entitled to a refund under this section

may reduce taxable receipts by the taxable amount of the refund for the period in which the

refund occurs or may request a refund of an overpayment as provided in G.S. 105-241.7,

provided the tax has been refunded to the purchaser. The records of the retailer must clearly

reflect and support the claim for refund for an overpayment of tax or adjustment to taxable

receipts for the period in which the refund occurs.

(b) Service Contract. – When a service contract is cancelled and a purchaser receives a

refund, in whole or in part, of the sales price paid for the service contract, the purchaser may


receive a refund of the pro rata amount of the sales tax paid based on the taxable amount of the

sales price refunded as provided in this subsection:

(1) Refund from retailer. – If the purchaser receives a refund on any portion of the

sales price for a service contract purchased from the retailer required to remit

the tax on the retail sale of the service contract, then the provisions of

subsection (a) of this section apply.

(2) Refund application. – If the purchaser receives a refund on any portion of the

sales price for a service contract from a person other than the retailer required

to remit the tax on the retail sale of the service contract, then the amount

refunded to the purchaser by the person does not have to include the sales tax

on the taxable amount of the refund. If the amount refunded to the purchaser

by the person does not include the sales tax paid, then the purchaser may

apply to the Department for a refund of the pro rata amount of the tax paid

based on the taxable amount of the service contract refunded to the purchaser.

The application for a refund by a purchaser must be made on a form

prescribed by the Secretary, supported by documentation on the taxable

amount of the service contract refunded to the purchaser from the person who

refunded that amount, and filed within 30 days after the purchaser receives a

refund. An application for a refund filed by the purchaser after the due date is

barred. Taxes for which a refund is allowed directly to the purchaser for sales

tax paid on a service contract are not an overpayment of tax and do not accrue

interest as provided in G.S. 105-241.21. (2014-3, s. 6.1(d).)

§ 105-164.12: Repealed by Session Laws 2001-347, s. 2.11.

§ 105-164.12A. Electric golf cart and battery charger considered a single article.

The sale of an electric golf cart and a battery charger that is not physically attached to the

golf cart is considered the sale of a single article of tangible personal property in imposing tax

under this Article if the battery charger is designed to recharge the golf cart and is sold to the

purchaser of the golf cart when the golf cart is sold. (1985 (Reg. Sess., 1986), c. 901.)

§ 105-164.12B. Tangible personal property sold below cost with conditional service

contract.

(a) Conditional Service Contract Defined. – A conditional service contract is a contract

in which all of the following conditions are met:

(1) A seller transfers an item of tangible personal property to a consumer on the

condition that the consumer enter into an agreement to purchase services on

an ongoing basis for a minimum period of at least six months.

(2) The agreement requires the consumer to pay a cancellation fee to the seller if

the consumer cancels the contract for services within the minimum period.

(3) For the item transferred, the seller charges the consumer a price that, after any

price reduction the seller gives the consumer, is below the purchase price the

seller paid for the item. The seller's purchase price is presumed to be no

greater than the price the seller paid, as shown on the seller's purchase invoice,

for the same item within 12 months before the seller entered into the

conditional service contract.


(b) Tax. – If a seller transfers an item of tangible personal property as part of a

conditional service contract, a sale has occurred. The sales price of the item is presumed to be the

retail price at which the item would sell in the absence of the conditional service contract. Sales

tax is due at the time of the transfer on the following:

(1) Any part of the presumed sales price the consumer pays at that time, if the

service in the contract is taxable at the combined general rate.

(2) The presumed sales price, if the service in the contract is not taxable at the

combined general rate.

(c)-(f). Repealed by Session Laws 2007-244, s. 3, effective October 1, 2007. (1996, 2nd Ex.

Sess., c. 13, s. 5.1; 2001-414, ss. 16, 17; 2006-151, s. 6; 2007-244, s. 3.)

§ 105-164.12C. Items given away by merchants.

If a retailer engaged in the business of selling prepared food and drink for immediate or

on-premises consumption also gives prepared food or drink to its patrons or employees free of

charge, for the purpose of this Article, the property given away is considered sold along with the

property sold. If a retailer gives an item of inventory to a customer free of charge on the

condition that the customer purchase similar or related property, the item given away is

considered sold along with the item sold. In all other cases, property given away or used by any

retailer or wholesale merchant is not considered sold, whether or not the retailer or wholesale

merchant recovers its cost of the property from sales of other property. (2012-79, s. 2.10(a).)

Part 3. Exemptions and Exclusions.

§ 105-164.13. Retail sales and use tax.

The sale at retail and the use, storage, or consumption in this State of the following tangible

personal property, digital property, and services are specifically exempted from the tax imposed

by this Article:

Agricultural Group.

(1) Repealed by Session Laws 2013-316, s. 3.3(b), effective July 1, 2014, and


(1a), (1b) Repealed by Session Laws 2013-316, s. 3.3(b), effective July 1, 2014,


(2) Repealed by Session Laws 2001, c. 514, s. 1, effective February 1, 2002.

(2a) Repealed by Session Laws 2013-316, s. 3.3(b), effective July 1, 2014, and


(3) Products of forests and mines in their original or unmanufactured state when

such sales are made by the producer in the capacity of producer.

(4) Cotton, tobacco, peanuts or other farm products sold to manufacturers for

further manufacturing or processing.

(4a) Repealed by Session Laws 2013-316, s. 3.3(b), effective July 1, 2014, and


(4b) Products of a farm sold in their original state by the producer of the products

if the producer is not primarily a retail merchant and ice used to preserve

agriculture, aquaculture and commercial fishery products until the products

are sold at retail.

(4c), (4d) Repealed by Session Laws 2013-316, s. 3.3(b), effective July 1, 2014,



(4e) Repealed by Session Laws 2006-162, s. 8(b), effective July 24, 2006.

(4f) Sales of the following to a person who is engaged in the commercial logging

business:

a. Logging machinery. – Logging machinery is machinery used to

harvest raw forest products for transport to first market.

b. Attachments and repair parts for logging machinery.

c. Lubricants applied to logging machinery.

d. Fuel used to operate logging machinery.

Industrial Group.

(4g) A wood chipper that meets all of the following requirements:

a. It is designed to be towed by a motor vehicle.

b. It is assigned a 17-digit vehicle identification number by the National

Highway Transportation Safety Association.

c. It is sold to a person who purchases a motor vehicle in this State that is

to be registered in another state and who uses the purchased motor

vehicle to tow the wood chipper to the state in which the purchased

motor vehicle is to be registered.

(5) Manufactured products produced and sold by manufacturers or producers to

other manufacturers, producers, or registered retailers or wholesale merchants,

for the purpose of resale except as modified by G.S. 105-164.3(51). This

exemption does not extend to or include retail sales to users or consumers not

for resale.

(5a) Products that are subject to tax under Article 5F of this Chapter.

(5b) Sales to a telephone company regularly engaged in providing

telecommunications service to subscribers on a commercial basis of central

office equipment, switchboard equipment, private branch exchange

equipment, terminal equipment other than public pay telephone terminal

equipment, and parts and accessories attached to the equipment.

(5c) Sales of towers, broadcasting equipment, and parts and accessories attached to

the equipment to a radio or television company licensed by the Federal

Communications Commission.

(5d) Sales of broadcasting equipment and parts and accessories attached to the

equipment to a cable service provider. For the purposes of this subdivision,

"broadcasting equipment" does not include cable.

(6) Repealed by Session Laws 1989 (Regular Session, 1990), c. 1068, s. 1.

(7) Sales of products of waters in their original or unmanufactured state when

such sales are made by the producer in the capacity of producer. Fish and

seafoods are likewise exempt when sold by the fisherman in that capacity.

(8) Sales to a manufacturer of tangible personal property that enters into or

becomes an ingredient or component part of tangible personal property that is

manufactured. This exemption does not apply to sales of electricity.

(8a) Sales to a small power production facility, as defined in 16 U.S.C. §

796(17)(A), of fuel and piped natural gas used by the facility to generate

electricity.

(9) Boats, fuel oil, lubricating oils, machinery, equipment, nets, rigging, paints,

parts, accessories, and supplies sold to any of the following:


a. The holder of a standard commercial fishing license issued under G.S.

113-168.2 for principal use in commercial fishing operations.

b. The holder of a shellfish license issued under G.S. 113-169.2 for

principal use in commercial shellfishing operations.

c. The operator of a for-hire boat, as defined in G.S. 113-174, for

principal use in the commercial use of the boat.

(10) Sales of the following to commercial laundries or to pressing and dry cleaning

establishments:

a. Articles or materials used for the identification of garments being

laundered or dry cleaned, wrapping paper, bags, hangers, starch, soaps,

detergents, cleaning fluids and other compounds or chemicals applied

directly to the garments in the direct performance of the laundering or

the pressing and cleaning service.

b. Laundry and dry-cleaning machinery, parts and accessories attached to

the machinery, and lubricants applied to the machinery.

c. Fuel and piped natural gas used in the direct performance of the

laundering or the pressing and cleaning service. The exemption does

not apply to electricity.

Motor Fuels Group.

(10a) Sales of the following to a major recycling facility:

a. Lubricants and other additives for motor vehicles or machinery and

equipment used at the facility.

b. Materials, supplies, parts, and accessories, other than machinery and

equipment, that are not capitalized by the taxpayer and are used or

consumed in the manufacturing and material handling processes at the

facility.

c. Electricity used at the facility.

(10b) Recodified as G.S. 105-164.13(10a)c. by Session Laws 2005-276, s. 33.9,

effective January 1, 2006.

(11) Any of the following fuel:

a. Motor fuel, as taxed in Article 36C of this Chapter, except motor fuel

for which a refund of the per gallon excise tax is allowed under G.S.

105-449.105A or G.S. 105-449.107.

b. Alternative fuel taxed under Article 36D of this Chapter, unless a

refund of that tax is allowed under G.S. 105-449.107.

(11a) Sales of diesel fuel to railroad companies for use in rolling stock other than

motor vehicles. The definitions in G.S. 105-333 apply in this subdivision.

(11b) Sales of aviation gasoline and jet fuel to an interstate air business for use in a

commercial aircraft. For purposes of this subdivision, the term "commercial

aircraft" has the same meaning as defined in subdivision (45a) of this

subsection. This subdivision expires January 1, 2020.

Medical Group.

(12) Sales of any of the following items:

a. Prosthetic devices for human use.

b. Mobility enhancing equipment sold on a prescription.

c. Durable medical equipment sold on prescription.


d. Durable medical supplies sold on prescription.

(13) All of the following drugs, including their packaging materials and any

instructions or information about the drugs included in the package with them:

a. Drugs required by federal law to be dispensed only on prescription.

b. Over-the-counter drugs sold on prescription.

c. Insulin.

(13a) Repealed by Session Laws 1996, Second Extra Session, c. 14, s. 16.

(13b) Repealed by Session Laws 1999, c. 438, s. 7, effective October 1, 1999.

(13c) Repealed by Session Laws 2013-316, s. 3.2(a), effective January 1, 2014, and


Printed Materials Group.

(14) Public school books on the adopted list, the selling price of which is fixed by

State contract.

(14a) Recodified as subdivision (33a) by Session Laws 2000-120, s. 5, effective

July 14, 2000.

Transactions Group.

(15) Accounts of purchasers, representing taxable sales, on which the tax imposed

by this Article has been paid, that are found to be worthless and actually

charged off for income tax purposes may, at corresponding periods, be

deducted from gross sales. In the case of a municipality that sells electricity,

the account may be deducted if it meets all the conditions for charge-off that

would apply if the municipality were subject to income tax. Any accounts

deducted pursuant to this subdivision must be added to gross sales if

afterwards collected.

(16) Sales of an article repossessed by the vendor if tax was paid on the sales price

of the article.

Exempt Status Group.

(17) Sales which a state would be without power to tax under the limitations of the

Constitution or laws of the United States or under the Constitution of this

State.

Unclassified Group.



(20) Sales by blind merchants operating under supervision of the Department of

Health and Human Services.

(21) The lease or rental of motion picture films used for exhibition purposes where

the lease or rental of such property is an established business or part of an

established business or the same is incidental or germane to said business of

the lessee.

(22) The lease or rental of films, motion picture films, transcriptions and

recordings to radio stations and television stations operating under a certificate

from the Federal Communications Commission.

(22a) Sales of audiovisual masters made or used by a production company in

making visual and audio images for first generation reproduction. For the

purpose of this subdivision, an "audiovisual master" is an audio or video film,


tape, or disk or another audio or video storage device from which all other

copies are made.

(23) Sales of the following packaging items:

a. Wrapping paper, labels, wrapping twine, paper, cloth, plastic bags,

cartons, packages and containers, cores, cones or spools, wooden

boxes, baskets, coops and barrels, including paper cups, napkins and

drinking straws and like articles sold to manufacturers, producers and

retailers, when such materials are used for packaging, shipment or

delivery of tangible personal property which is sold either at wholesale

or retail and when such articles constitute a part of the sale of such

tangible personal property and are delivered with it to the customer.

b. A container that is used as packaging by the owner of the container or

another person to enclose tangible personal property for delivery to a

purchaser of the property and is required to be returned to its owner for

reuse.

(24) Sales of fuel and other items of tangible personal property for use or

consumption by or on ocean-going vessels which ply the high seas in

interstate or foreign commerce in the transport of freight and/or passengers for

hire exclusively, when delivered to an officer or agent of such vessel for the

use of such vessel; provided, however, that sales of fuel and other items of

tangible personal property made to officers, agents, members of the crew or

passengers of such vessels for their personal use shall not be exempted from

payment of the sales tax.

(25) Sales by merchants on the Cherokee Indian Reservation when such merchants

are authorized to do business on the Reservation and are paying the tribal

gross receipts levy to the Tribal Council.

(26) Food and prepared food sold within the school building during the regular

school day. For purposes of this exemption, the term "school" is an entity

regulated under Chapter 115C of the General Statutes.

(26a) Food and prepared food sold not for profit by a public school cafeteria to a

child care center that participates in the Child and Adult Care Food Program

of the Department of Health and Human Services.

(27) Repealed by Session Laws 2013-316, s. 3.2(a), effective January 1, 2014, and


(27a) Repealed by Session Laws 2013-316, s. 3.4(a), effective July 1, 2014, and

applicable to purchases made on or after that date.

(28) Repealed by Session Laws 2013-316, s. 3.2(a), effective January 1, 2014, and


(29) Repealed by Session Laws 2005-435, s. 30, effective September 27, 2005.

(29a) Repealed by Session Laws 1995 (Regular Session, 1996), c. 646, s. 5.

(30) Repealed by Session Laws 2014-3, s. 8.3(a), effective October 1, 2014, and


(31) Sales of meals not for profit to elderly and incapacitated persons by charitable

or religious organizations not operated for profit which are entitled to the

refunds provided by G.S. 105-164.14(b), when such meals are delivered to the

purchasers at their places of abode.


(31a) Food and prepared food sold by a church or religious organization not

operated for profit when the proceeds of the sales are actually used for

religious activities.

(31b) Repealed by Session Laws 1996, Second Extra Session, c. 14, s. 16.

(32) Sales of motor vehicles, the sale of a motor vehicle body to be mounted on a

motor vehicle chassis when a certificate of title has not been issued for the

chassis, and the sale of a motor vehicle body mounted on a motor vehicle

chassis that temporarily enters the State so the manufacturer of the body can

mount the body on the chassis.

(33) Tangible personal property purchased solely for the purpose of export to a

foreign country for exclusive use or consumption in that or some other foreign

country, either in the direct performance or rendition of professional or

commercial services, or in the direct conduct or operation of a trade or

business, all of which purposes are actually consummated, or purchased by

the government of a foreign country for export which purpose is actually

consummated. "Export" shall include the acts of possessing and marshalling

such property, by either the seller or the purchaser, for transportation to a

foreign country, but shall not include devoting such property to any other use

in North Carolina or the United States. "Foreign country" shall not include

any territory or possession of the United States.

In order to qualify for this exemption, an affidavit of export indicating

compliance with the terms and conditions of this exemption, as prescribed by

the Secretary of Revenue, must be submitted by the purchaser to the seller,

and retained by the seller to evidence qualification for the exemption.

If the purposes qualifying the property for exemption are not

consummated, the purchaser shall be liable for the tax which was avoided by

the execution of the aforesaid affidavit as well as for applicable penalties and

interest and the affidavit shall contain express provision that the purchaser has

recognized and assumed such liability.

The principal purpose of this exemption is to encourage the flow of

commerce through North Carolina ports that is now moving through

out-of-state ports. However, it is not intended that property acquired for

personal use or consumption by the purchaser, including gifts, shall be exempt

hereunder.

(33a) Tangible personal property sold by a retailer to a purchaser inside or outside

this State, when the property is delivered by the retailer in this State to a

common carrier or to the United States Postal Service for delivery to the

purchaser or the purchaser's designees outside this State and the purchaser

does not subsequently use the property in this State. This exemption includes

printed material sold by a retailer to a purchaser inside or outside this State

when the printed material is delivered directly to a mailing house, to a

common carrier, or to the United States Postal Service for delivery to a

mailing house in this State that will preaddress and presort the material and

deliver it to a common carrier or to the United States Postal Service for

delivery to recipients outside this State designated by the purchaser.


(34) Sales of items by a nonprofit civic, charitable, educational, scientific or

literary organization when the net proceeds of the sales will be given or

contributed to the State of North Carolina or to one or more of its agencies or

instrumentalities, or to one or more nonprofit charitable organizations, one of

whose purposes is to serve as a conduit through which such net proceeds will

flow to the State or to one or more of its agencies or instrumentalities. This

exemption does not apply to gross receipts derived from an admission charge

to an entertainment activity.

(35) Sales by a nonprofit civic, charitable, educational, scientific, literary, or

fraternal organization when all of the conditions listed in this subdivision are

met. This exemption does not apply to gross receipts derived from an

admission charge to an entertainment activity.

a. The sales are conducted only upon an annual basis for the purpose of

raising funds for the organization's activities.

b. The proceeds of the sale are actually used for the organization's

activities.

c. The products sold are delivered to the purchaser within 60 days after

the first solicitation of any sale made during the organization's annual

sales period.

(36) Advertising supplements and any other printed matter ultimately to be

distributed with or as part of a newspaper.

(37) Repealed by Session Laws 2001-424, s. 34.23(a), effective December 1, 2001,


(38) Food and other items lawfully purchased under the Food Stamp Program, 7

U.S.C. § 2011, and supplemental foods lawfully purchased with a food

instrument issued under the Special Supplemental Nutrition Program, 42

U.S.C. § 1786, and supplemental foods purchased for direct distribution by

the Special Supplemental Nutrition Program.

(39) Sales of paper, ink, and other tangible personal property to commercial

printers and commercial publishers for use as ingredients or component parts

of free distribution periodicals and sales by printers of free distribution

periodicals to the publishers of these periodicals. As used in this subdivision,

the term "free distribution periodical" means a publication that is continuously

published on a periodic basis monthly or more frequently, is provided without

charge to the recipient, and is distributed in any manner other than by mail.

(40) Sales to the Department of Transportation.

(41) Sales of mobile classrooms to local boards of education or to local boards of

trustees of community colleges.

(42) Tangible personal property that is purchased by a retailer for resale or is

manufactured or purchased by a wholesale merchant for resale and then

withdrawn from inventory and donated by the retailer or wholesale merchant

to either a governmental entity or a nonprofit organization, contributions to

which are deductible as charitable contributions for federal income tax

purposes.

(43) Custom computer software. Custom computer software and the portion of

prewritten computer software that is modified or enhanced if the modification


or enhancement is designed and developed to the specifications of a specific

purchaser and the charges for the modification or enhancement are separately

stated.

(43a) Computer software that meets any of the following descriptions:

a. It is purchased to run on an enterprise server operating system. The

exemption includes a purchase or license of computer software for

high-volume, simultaneous use on multiple computers that is housed

or maintained on an enterprise server or end users' computers. The

exemption includes software designed to run a computer system, an

operating program, or application software.

b. It is sold to a person who operates a datacenter and is used within the

datacenter.

c. It is sold to a person who provides cable service, telecommunications

service, or video programming and is used to provide ancillary service,

cable service, Internet access service, telecommunications service, or

video programming.

(43b) Computer software or digital property that becomes a component part of other

computer software or digital property that is offered for sale or of a service

that is offered for sale.

(44) Repealed by Session Laws 2013-316, s. 4.1(d), effective July 1, 2014, and


(45) Sales of aircraft lubricants, aircraft repair parts, and aircraft accessories to an

interstate passenger air carrier for use at its hub.

(45a) Sales to an interstate air business of tangible personal property that becomes a

component part of or is dispensed as a lubricant into commercial aircraft

during its maintenance, repair, or overhaul. For the purpose of this

subdivision, commercial aircraft includes only aircraft that has a certified

maximum take-off weight of more than 12,500 pounds and is regularly used

to carry for compensation passengers, commercial freight, or individually

addressed letters and packages.

(45b) Sales of the following items to an interstate air courier for use at its hub:

a. Aircraft lubricants, aircraft repair parts, and aircraft accessories.

b. Materials handling equipment, racking systems, and related parts and

accessories for the storage or handling and movement of tangible

personal property at an airport or in a warehouse or distribution

facility.

(45c) Sales of aircraft simulators to a company for flight crew training and

maintenance training.

(45d) Parts and accessories for use in the repair or maintenance of a qualified

aircraft or a qualified jet engine.

(46) Sales of electricity by a municipality whose only wholesale supplier of

electric power is a federal agency and who is required by a contract with that

federal agency to make payments in lieu of taxes.

(47) An amount charged as a deposit on a beverage container that is returnable to

the vendor for reuse when the amount is refundable or creditable to the

vendee, whether or not the deposit is separately charged.


(48) An amount charged as a deposit on an aeronautic, automotive, industrial,

marine, or farm replacement part that is returnable to the vendor for rebuilding

or remanufacturing when the amount is refundable or creditable to the vendee,

whether or not the deposit is separately charged. This exemption does not

include tires or batteries.

(49) (Repealed effective March 1, 2016 – see notes) Installation charges when the

charges are separately stated on an invoice or similar billing document given

to the purchaser at the time of sale.

(49a) Delivery charges for delivery of direct mail if the charges are separately stated

on an invoice or similar billing document given to the purchaser at the time of

sale.

(50) Fifty percent (50%) of the sales price of tangible personal property sold

through a coin-operated vending machine, other than tobacco and newspapers.

(51) Water delivered by or through main lines or pipes for either commercial or

domestic use or consumption.

(52) Items subject to sales and use tax under G.S. 105-164.4, other than electricity,

telecommunications service, and ancillary service as defined in G.S.

105-164.4, if all of the following conditions are met:

a. The items are purchased by a State agency for its own use and in

accordance with G.S. 105-164.29A.

b. The items are purchased pursuant to a valid purchase order issued by

the State agency that contains the exemption number of the agency and

a description of the property purchased, or the items purchased are

paid for with a State-issued check, electronic deposit, credit card,

procurement card, or credit account of the State agency.

c. For all purchases other than by an agency-issued purchase order, the

agency must provide to or have on file with the retailer the agency's

exemption number.

(53) Sales to a professional land surveyor of tangible personal property on which

custom aerial survey data is stored in digital form or is depicted in graphic

form. Data is custom if it was created to the specifications of the professional

land surveyor purchasing the property. A professional land surveyor is a

person licensed as a surveyor under Chapter 89C of the General Statutes.

(54) The following telecommunications services and charges:

a. Telecommunications service that is a component part of or is

integrated into a telecommunications service that is resold. This

exemption does not apply to service purchased by a pay telephone

provider who uses the service to provide pay telephone service.

Examples of services that are resold include carrier charges for access

to an intrastate or interstate interexchange network, interconnection

charges paid by a provider of mobile telecommunications service, and

charges for the sale of unbundled network elements. An unbundled

network element is a network element, as defined in 47 U.S.C. §

153(29), to which access is provided on an unbundled basis pursuant

to 47 U.S.C. § 251(c)(3).

b. Pay telephone service.


c. 911 charges imposed under G.S. 143B-1403 and remitted to the 911

Fund under that section.

d. Charges for telecommunications service made by a hotel, motel, or

another entity whose gross receipts are taxable under G.S.

105-164.4(a)(3) when the charges are incidental to the occupancy of

the entity's accommodations.

e. Telecommunications service purchased or provided by a State agency

or a unit of local government for the State Network or another data

network owned or leased by the State or unit of local government.

(55) Sales of electricity for use at an eligible Internet datacenter and eligible

business property to be located and used at an eligible Internet datacenter. As

used in this subdivision, "eligible business property" is property that is

capitalized for tax purposes under the Code and is used either:

a. For the provision of a service included in the business of the primary

user of the datacenter, including equipment cooling systems for

managing the performance of the property.

b. For the generation, transformation, transmission, distribution, or

management of electricity, including exterior substations and other

business personal property used for these purposes.

c. To provide related computer engineering or computer science

research.

If the level of investment required by G.S. 105-164.3(8e)d. is not timely

made, then the exemption provided under this subdivision is forfeited. If the

level of investment required by G.S. 105-164.3(8e)d. is timely made but any

specific eligible business property is not located and used at an eligible

Internet datacenter, then the exemption provided for such eligible business

property under this subdivision is forfeited. If the level of investment required

by G.S. 105-164.3(8e)d. is timely made but any portion of the electricity is not

used at an eligible Internet datacenter, then the exemption provided for such

electricity under this subdivision is forfeited. A taxpayer that forfeits an

exemption under this subdivision is liable for all past taxes avoided as a result

of the forfeited exemption, computed from the date the taxes would have been

due if the exemption had not been allowed, plus interest at the rate established

under G.S. 105-241.21. If the forfeiture is triggered due to the lack of a timely

investment required by G.S. 105-164.3(8e)d., then interest is computed from

the date the taxes would have been due if the exemption had not been allowed.

For all other forfeitures, interest is computed from the time as of which the

eligible business property or electricity was put to a disqualifying use. The

past taxes and interest are due 30 days after the date the exemption is

forfeited. A taxpayer that fails to pay the past taxes and interest by the due

date is subject to the provisions of G.S. 105-236.

(55a) Sales of electricity for use at a qualifying datacenter and datacenter support

equipment to be located and used at the qualifying datacenter. As used in this

subdivision, "datacenter support equipment" is property that is capitalized for

tax purposes under the Code and is used for one of the following purposes:


a. The provision of a service or function included in the business of an

owner, user, or tenant of the datacenter.

b. The generation, transformation, transmission, distribution, or

management of electricity, including exterior substations, generators,

transformers, unit substations, uninterruptible power supply systems,

batteries, power distribution units, remote power panels, and other

capital equipment used for these purposes.

c. HVAC and mechanical systems, including chillers, cooling towers, air

handlers, pumps, and other capital equipment used for these purposes.

d. Hardware and software for distributed and mainframe computers and

servers, data storage devices, network connectivity equipment, and

peripheral components and equipment.

e. To provide related computer engineering or computer science

research.

If the level of investment required by G.S. 105-164.3(33c) is not timely

made, the exemption provided under this subdivision is forfeited. If the level

of investment required by G.S. 105-164.3(33c) is timely made but any specific

datacenter support equipment is not located and used at the qualifying

datacenter, the exemption provided for such datacenter support equipment

under this subdivision is forfeited. If the level of investment required by G.S.

105-164.3(33c) is timely made but any portion of electricity is not used at the

qualifying datacenter, the exemption provided for such electricity under this

subdivision is forfeited. A taxpayer that forfeits an exemption under this

subdivision is liable for all past taxes avoided as a result of the forfeited

exemption, computed from the date the taxes would have been due if the

exemption had not been allowed, plus interest at the rate established under

G.S. 105-241.21. If the forfeiture is triggered due to the lack of a timely

investment required by G.S. 105-164.3(33c), interest is computed from the

date the taxes would have been due if the exemption had not been allowed.

For all other forfeitures, interest is computed from the time as of which the

datacenter support equipment or electricity was put to a disqualifying use. The

past taxes and interest are due 30 days after the date the exemption is

forfeited. A taxpayer that fails to pay the past taxes and interest by the due

date is subject to the provisions of G.S. 105-236.

(56) Sales to the owner or lessee of an eligible railroad intermodal facility of

intermodal cranes, intermodal hostler trucks, and railroad locomotives that

reside on the premises of the facility and are used at the facility.

(57) Fuel, piped natural gas, and electricity sold to a manufacturer for use in

connection with the operation of a manufacturing facility. The exemption does

not apply to electricity used at a facility at which the primary activity is not

manufacturing.

(58) Tangible personal property purchased with a client assistance debit card

issued for disaster assistance relief by a State agency or a federal agency or

instrumentality.

(59) Interior design services provided in conjunction with the sale of tangible

personal property.


(60) Gross receipts derived from an admission charge to an entertainment activity

are exempt as provided in G.S. 105-164.4G.

(61) A service contract for tangible personal property may be exempt as provided

in G.S. 105-164.4I.

(61a) (Effective March 1, 2016 – see notes) Repair, maintenance, and installation

services provided for an item, other than a motor vehicle, for which a service

contract on the item is exempt from tax under G.S. 105-164.4I. Repair,

maintenance, and installation services provided for a motor vehicle are subject

to tax, except as provided under subdivision (62a) of this subsection.

(61b) (Effective March 1, 2016 – see notes) Repair, maintenance, and installation

services purchased for resale.

(62) (Effective until March 1, 2016) An item used to maintain or repair tangible

personal property or a motor vehicle pursuant to a service contract taxable

under this Article if the purchaser of the contract is not charged for the item.

For purposes of this exemption, the term "item" does not include a tool,

equipment, supply, or similar tangible personal property used to complete the

maintenance or repair and that is not deemed to be a component or repair part

of the tangible personal property or motor vehicle for which a service contract

is sold to a purchaser.

(62) (Effective March 1, 2016) An item or repair, maintenance, and installation

services used to maintain or repair tangible personal property pursuant to a

service contract taxable under this Article if the purchaser of the contract is

not charged for the item or services. This exemption does not apply to an item

or repair, maintenance, and installation services provided for a motor vehicle

pursuant to a service contract exempt from tax under this Article unless the

purchaser of the contract is not charged for the item or services. For purposes

of this exemption, the term "item" does not include a tool, equipment, supply,

or similar tangible personal property used to complete the maintenance or

repair and that is not deemed to be a component or repair part of the tangible

personal property for which a service contract is sold to a purchaser.

(62a) (Effective March 1, 2016) A replacement item, a repair part, or repair,

maintenance, and installation services to maintain or repair tangible personal

property or a motor vehicle pursuant to a manufacturer's warranty or a dealer's

warranty. For purposes of this subdivision, the following definitions apply:

a. Dealer's warranty. – An explicit warranty the seller of an item extends

to the purchaser of the item as part of the purchase price of the item.

b. Manufacturer's warranty. – An explicit warranty the manufacturer of

an item extends to the purchaser of the item as part of the purchase

price of the item.

(63) Food and prepared food to be provided to a person entitled to the food and

prepared food under a prepaid meal plan subject to tax under G.S.

105-164.4(a)(12).

(64) Fifty percent (50%) of the sales price of a modular home or a manufactured

home, including all accessories attached when delivered to the purchaser.

(65) The sale, lease, or rental of an engine to a professional motorsports racing

team or a related member of a team for use in competition in a sanctioned race


series. For purposes of this subdivision, the term "sale" includes gross receipts

derived from an agreement to provide an engine to a professional motorsports

racing team or related member of a team for use in competition in a

sanctioned race series, where such agreement does not meet the definition of a

"service contract" as defined in G.S. 105-164.3 but may meet the definition of

the term "lease or rental" as defined in G.S. 105-164.3. This subdivision

expires January 1, 2020.

(65a) An engine or a part to build or rebuild an engine for the purpose of providing

an engine under an agreement to a professional motorsports racing team or a

related member of a team for use in competition in a sanctioned race series.

This subdivision expires January 1, 2020. (1957, c. 1340, s. 5; 1959, c. 670; c.

1259, s. 5; 1961, c. 826, s. 2; cc. 1103, 1163; 1963, c. 1169, ss. 7-9; 1965, c.

1041; 1967, c. 756; 1969, c. 907; 1971, c. 990; 1973, c. 476, s. 143; c. 708, s.

1; cc. 1064, 1076; c. 1287, s. 8; 1975, 2nd Sess., c. 982; 1977, c. 771, s. 4;

1977, 2nd Sess., c. 1219, s. 43.6; 1979, c. 46, ss. 1, 2; c. 156, s. 1; c. 201; c.

625, ss. 1, 2; c. 801, ss. 74, 75; 1979, 2nd Sess., c. 1099, s. 1; 1981, cc. 14,

207, 982; 1983, c. 156; c. 570, s. 21; c. 713, ss. 91, 92; c. 873; c. 887; 1983

(Reg. Sess., 1984), c. 1071, s. 1; 1985, c. 114, s. 4; c. 555; c. 656, ss. 24, 25;

1985 (Reg. Sess., 1986), c. 953; c. 973; c. 982, s. 2; 1987, c. 800, s. 1; 1987

(Reg. Sess., 1988), c. 937; 1989, c. 692, ss. 3.5, 3.6; c. 748, s. 1; 1989 (Reg.

Sess., 1990), c. 989; c. 1060; c. 1068, ss. 1, 2; 1991, c. 45, s. 17; c. 79, s. 2; c.

618, s. 1; c. 689, s. 314; 1991 (Reg. Sess., 1992), c. 931, ss. 1, 2; c. 935, s. 1;

c. 940, s. 1; c. 949, s. 1; c. 1007, s. 44; 1993, c. 484, s. 3; c. 513, s. 11; 1993

(Reg. Sess., 1994), c. 739, s. 1; 1995, c. 390, s. 14; c. 451, s. 1; c. 477, ss. 2, 3;

1995 (Reg. Sess., 1996), c. 646, ss. 4, 5; c. 649, s. 1; 1996, 2nd Ex. Sess., c.

14, ss. 15, 16; 1997-369, s. 2; 1997-370, s. 2; 1997-397, s. 1; 1997-423, s. 3;

1997-443, s. 11A.118(a); 1997-456, s. 27; 1997-506, s. 36; 1997-521, s. 1;

1998-22, s. 6; 1998-55, ss. 9, 15; 1998-98, ss. 14, 14.1, 49, 107; 1998-146, s.

9; 1998-171, s. 10(a), (b); 1998-225, s. 4.3; 1999-337, s. 31; 1999-360, s.

7(a)-(c); 1999-438, ss. 5-12; 2000-120, s. 5; 2000-153, s. 5; 2001-347, s. 2.12;

2001-424, s. 34.23(a); 2001-476, s. 17(e); 2001-509, s. 1; 2001-514, s. 1;

2002-184, s. 9; 2003-284, ss. 45.5, 45.5A; 2003-349, s. 11; 2003-416, ss.

18(a), 21; 2003-431, s. 1; 2004-124, ss. 32B.2, 32B.4; 2005-276, s. 33.9;

2005-435, ss. 30, 31; 2006-19, s. 1; 2006-33, s. 5; 2006-66, s. 24.17(b);

2006-162, ss. 8(a), 8(b); 2006-168, s. 4.2; 2006-252, s. 2.25(b); 2007-244, s.

4; 2007-323, s. 31.23(c); 2007-368, s. 1; 2007-383, s. 6; 2007-397, ss. 10(g),

10(h); 2007-491, s. 44(1)a; 2007-500, s. 1; 2007-527, ss. 10, 27; 2008-107, ss.

28.6(a), 28.20(a); 2009-451, s. 27A.3(f), (k); 2009-511, s. 1; 2010-91, s. 3;

2010-147, s. 6.1; 2011-330, s. 18; 2012-79, s. 1.4; 2013-316, ss. 3.2(a), (b),

3.3(b), 3.4(a), 4.1(d), 5(c), 6(c); 2013-360, s. 7.4(e); 2013-414, ss. 11(a),

58(e); 2014-3, ss. 4.1(e), 5.1(d)-(f), 6.1(c), (f), 8.3(a), (b); 2014-100, s.

37.3(a); 2015-6, ss. 2.12, 2.23(a); 2015-241, ss. 7A.3, 32.18(d), (e); 2015-259,

ss. 3(b), 4.1(c), 4.2(d), 5(b), (c), 6(b); 2015-261, ss. 5(a), (b).)

§ 105-164.13A. Service charges on food, beverages, or prepared food.


When a service charge is imposed on food, beverages, or prepared food, so much of the

service charge that does not exceed twenty percent (20%) of the sales price is considered a tip

and is specifically exempted from the tax imposed by this Article if it meets both of the


(1) Is separately stated in the price list, menu, or written proposal and also in the

invoice or bill.

(2) Is turned over to the personnel directly involved in the service of the food,

beverages, or prepared food, in accordance with G.S. 95-25.6. (1979, c. 801,

s. 76; 1979, 2nd Sess., c. 1101; 1999-438, s. 13; 2013-414, s. 11(b).)

§ 105-164.13B. Food exempt from tax.

(a) State Exemption. – Food is exempt from the taxes imposed by this Article unless the

food is included in one of the subdivisions in this subsection. The following food items are

subject to tax:

(1) Repealed by Session Laws 2005-276, s. 33.10, effective October 1, 2005.

(2) Dietary supplements.

(3) Food sold through a vending machine.

(4) Prepared food, other than bakery items sold without eating utensils by an

artisan bakery. The term "bakery item" includes bread, rolls, buns, biscuits,

bagels, croissants, pastries, donuts, danish, cakes, tortes, pies, tarts, muffins,

bars, cookies, and tortillas. An artisan bakery is a bakery that meets all of the

following requirements:

a. It derives over eighty percent (80%) of its gross receipts from bakery

items.

b. Its annual gross receipts, combined with the gross receipts of all

related persons, do not exceed one million eight hundred thousand

dollars ($1,800,000). For purposes of this subdivision, the term

"related person" means a person described in one of the relationships

set forth in section 267(b) or 707(b) of the Code.

(5) Soft drinks.

(6) Repealed by Session Laws 2003-284, s. 45.6B, effective January 1, 2004.

(7) Candy.

(b) Administration of Local Food Tax. – The Secretary must administer local sales and

use taxes imposed on food as if they were imposed under this Article. This applies to local taxes

on food imposed under Subchapter VIII of this Chapter and under Chapter 1096 of the 1967

Session Laws. (1998-212, s. 29A.1(b); 2001-347, s. 2.13; 2001-489, s. 3(b); 2003-284, ss. 45.6,

45.6A, 45.6B; 2003-416, s. 22; 2005-276, s. 33.10; 2008-107, s. 28.19(a); 2009-445, s. 42;

2015-6, s. 2.21.)

§§ 105-164.13C, 105-164.13D: Repealed by Session Laws 2013-316, s. 3.4(a), effective July 1,

2014, and applicable to purchases made on or after July 1, 2014.

§ 105-164.13E. Exemption for farmers.

(a) Exemption. – A qualifying farmer is a person who has an annual income from

farming operations for the preceding taxable year of ten thousand dollars ($10,000) or more or

who has an average annual income from farming operations for the three preceding taxable years


of ten thousand dollars ($10,000) or more. For purposes of this section, the term "income from

farming operations" means sales plus any other amounts treated as gross income under the Code

from farming operations. A qualifying farmer includes a dairy operator, a poultry farmer, an egg

producer, a livestock farmer, a farmer of crops, and a farmer of an aquatic species, as defined in

G.S. 106-758. A qualifying farmer may apply to the Secretary for an exemption certificate

number under G.S. 105-164.28A. The exemption certificate expires when a person fails to meet

the income threshold for three consecutive taxable years or ceases to engage in farming

operations, whichever comes first.

The following tangible personal property, digital property, and services are exempt from

sales and use tax if purchased by a qualifying farmer and for use by the farmer in farming

operations. For purposes of this section, an item is used by a farmer for farming operations if it is

used for the planting, cultivating, harvesting, or curing of farm crops or in the production of

dairy products, eggs, or animals:

(1) Fuel, piped natural gas, and electricity that are measured by a separate meter

or another separate device and used for a purpose other than preparing food,

heating dwellings, and other household purposes.

(2) Commercial fertilizer, lime, land plaster, plastic mulch, plant bed covers,

potting soil, baler twine, and seeds.

(3) Farm machinery, attachment and repair parts for farm machinery, and

lubricants applied to farm machinery. The term "machinery" includes

implements that have moving parts or are operated or drawn by an animal.

The term does not include implements operated wholly by hand or motor

vehicles required to be registered under Chapter 20 of the General Statutes.

(4) A container used in the planting, cultivating, harvesting, or curing of farm

crops or in the production of dairy products, eggs, or animals or used in

packaging and transporting the farmer's product for sale.

(5) A grain, feed, or soybean storage facility and parts and accessories attached to

the facility.

(6) Any of the following substances when purchased for use on animals or plants,

as appropriate, held or produced for commercial purposes. This exemption

does not apply to any equipment or devices used to administer, release, apply,

or otherwise dispense these substances:

a. Remedies, vaccines, medications, litter materials, and feeds for

animals.

b. Rodenticides, insecticides, herbicides, fungicides, and pesticides.

c. Defoliants for use on cotton or other crops.

d. Plant growth inhibitors, regulators, or stimulators, including systemic

and contact or other sucker control agents for tobacco and other crops.

e. Semen.

(7) Baby chicks and poults sold for commercial poultry or egg production.

(8) Any of the following items concerning the housing, raising, or feeding of

animals:

a. A commercially manufactured facility to be used for commercial

purposes for housing, raising, or feeding animals or for housing

equipment necessary for these commercial activities. The exemption


also applies to commercially manufactured equipment, and parts and

accessories for the equipment, used in the facility.

b. Building materials, supplies, fixtures, and equipment that become a

part of and are used in the construction, repair, or improvement of an

enclosure or a structure specifically designed, constructed, and used

for housing, raising, or feeding animals or for housing equipment

necessary for one of these commercial activities. The exemption also

applies to commercially manufactured equipment, and parts and

accessories for the equipment, used in the enclosure or a structure.

(9) A bulk tobacco barn or rack, parts and accessories attached to the tobacco

barn or rack, and any similar apparatus, part, or accessory used to cure or dry

tobacco or another crop.

(b) Conditional Exemption. – A person who does not meet the definition of a qualifying

farmer in subsection (a) of this section may apply to the Department for a conditional exemption

certificate under G.S. 105-164.28A. A person with a conditional exemption certificate is allowed

to purchase items exempt from sales and use tax to the same extent as a qualifying farmer under

subsection (a) of this section. To receive a conditional exemption certificate under this

subsection, the person must certify that the person intends to engage in farming operations, as

that term is described in subsection (a) of this section, and that the person will timely file State

and federal income tax returns that reflect income and expenses incurred from farming

operations during the taxable years that the conditional exemption certificate applies.

A conditional exemption certificate issued under this subsection is valid for the taxable year

in which the certificate is issued and the following two taxable years, provided the person to

whom the certificate is issued is engaged in farming and provides copies of applicable State and

federal income tax returns to the Department within 90 days following the due date of an income

tax return for each taxable year covered by the conditional exemption certificate, including an

extension of the due date granted by the Secretary under G.S. 105-263. A conditional exemption

certificate issued under this subsection may not be extended or renewed beyond the original

three-year period. The Department may not issue a conditional exemption certificate to a person

who has had a conditional exemption certificate issued under this subsection during the prior 15

taxable years.

A person who purchases items with a conditional exemption certificate must maintain

documentation of the items purchased and copies of State and federal income tax returns that

reflect activities from farming operations for the period of time covered by the conditional

exemption certificate for three years following the expiration of the conditional exemption

certificate. The Secretary may require a person who has a conditional exemption certificate to

provide any other information requested by the Secretary to verify the person met the conditions

of this subsection. A person who fails to provide the information requested by the Secretary in a

timely manner or who fails to meet the requirements of this subsection becomes liable for any

taxes for which an exemption under this subsection was claimed. The taxes become due and

payable at the expiration of the conditional exemption certificate, and interest accrues from the

date of the original purchase. Additionally, where the person does not timely provide the

information requested by the Secretary, the misuse of exemption certificate penalty in G.S.

105-236(a)(5a) applies to each seller identified by the Department from which the person made a

purchase.


(c) Contract with a Farmer. – A qualifying item listed in subdivisions (5), (8), and (9) of

subsection (a) of this section purchased to fulfill a contract with a person who holds a qualifying

farmer exemption certificate or a conditional farmer exemption certificate issued under G.S.

105-164.28A is exempt from sales and use tax to the same extent as if purchased directly by the

person who holds the exemption certificate. A contractor that purchases one of the items allowed

an exemption under this section must provide an exemption certificate to the retailer that

includes the name of the agricultural exemption certificate holder and the agricultural exemption

certificate number issued to that holder.

(d) Definition. – For purposes of this section, the term "taxable year" has the same

meaning as defined in G.S. 105-153.3. (2013-316, s. 3.3(a); 2013-363, s. 11.4; 2014-3, s. 3.1(a);

2015-6, s. 2.13(a).)

§ 105-164.14. Certain refunds authorized.

(a) Interstate Carriers. – An interstate carrier is allowed a refund, in accordance with this

section, of part of the sales and use taxes paid by it on the purchase in this State of railway cars

and locomotives, and fuel, lubricants, repair parts, and accessories for a motor vehicle, railroad

car, locomotive, or airplane the carrier operates. An "interstate carrier" is a person who is

engaged in transporting persons or property in interstate commerce for compensation. The

Secretary shall prescribe the periods of time, whether monthly, quarterly, semiannually, or

otherwise, with respect to which refunds may be claimed, and shall prescribe the time within

which, following these periods, an application for refund may be made.

An applicant for refund shall furnish the following information and any proof of the

information required by the Secretary:

(1) A list identifying the railway cars, locomotives, fuel, lubricants, repair parts,

and accessories purchased by the applicant inside or outside this State during

the refund period.

(2) The purchase price of the items listed in subdivision (1) of this subsection.

(3) The sales and use taxes paid in this State on the listed items.

(4) The number of miles the applicant's motor vehicles, railroad cars,

locomotives, and airplanes were operated both inside and outside this State

during the refund period. Airplane miles are not in this State if the airplane

does not depart or land in this State.

(5) Any other information required by the Secretary.

For each applicant, the Secretary shall compute the amount to be refunded as follows. First,

the Secretary shall determine the mileage ratio. The numerator of the mileage ratio is the number

of miles the applicant operated all motor vehicles, railroad cars, locomotives, and airplanes in

this State during the refund period. The denominator of the mileage ratio is the number of miles

the applicant operated all motor vehicles, railroad cars, locomotives, and airplanes both inside

and outside this State during the refund period. Second, the Secretary shall determine the

applicant's proportional liability for the refund period by multiplying this mileage ratio by the

purchase price of the items identified in subdivision (1) of this subsection and then multiplying

the resulting product by the tax rate that would have applied to the items if they had all been

purchased in this State. Third, the Secretary shall refund to each applicant the excess of the

amount of sales and use taxes the applicant paid in this State during the refund period on these

items over the applicant's proportional liability for the refund period.

(a1) Repealed by Session Laws 2010-166, s. 1.17, effective July 1, 2010.


(a2) Utility Companies. – A utility company is allowed a refund, in accordance with this

section, of part of the sales and use taxes paid by it on the purchase in this State of railway cars

and locomotives and accessories for a railway car or locomotive the utility company operates.

The Secretary shall prescribe the periods of time, whether monthly, quarterly, semiannually, or

otherwise, with respect to which refunds may be claimed and shall prescribe the time within

which, following these periods, an application for refund may be made.

An applicant for refund shall furnish the following information and any proof of the


(1) A list identifying the railway cars, locomotives, and accessories purchased by

the applicant inside or outside this State during the refund period.

(2) The purchase price of the items listed in subdivision (1) of this subsection.

(3) The sales and use taxes paid in this State on the listed items.

(4) The number of miles the applicant's railway cars and locomotives were

operated both inside and outside this State during the refund period.


For each applicant, the Secretary shall compute the amount to be refunded as follows. First,

the Secretary shall determine the ratio of the number of miles the applicant operated its railway

cars and locomotives in this State during the refund period to the number of miles it operated

them both inside and outside this State during the refund period. Second, the Secretary shall

determine the applicant's proportional liability for the refund period by multiplying this mileage

ratio by the purchase price of the items identified in subdivision (1) of this subsection and then

multiplying the resulting product by the tax rate that would have applied to the items if they had

all been purchased in this State. Third, the Secretary shall refund to each applicant the excess of

the amount of sales and use taxes the applicant paid in this State during the refund period on

these items over the applicant's proportional liability for the refund period.

(b) Nonprofit Entities and Hospital Drugs. – A nonprofit entity is allowed a semiannual

refund of sales and use taxes paid by it under this Article on direct purchases of tangible personal

property and services for use in carrying on the work of the nonprofit entity. Sales and use tax

liability indirectly incurred by a nonprofit entity through reimbursement to an authorized person

of the entity for the purchase of tangible personal property and services for use in carrying on the

work of the nonprofit entity is considered a direct purchase by the entity. Sales and use tax

liability indirectly incurred by a nonprofit entity on building materials, supplies, fixtures, and

equipment that become a part of or annexed to any building or structure that is owned or leased

by the nonprofit entity and is being erected, altered, or repaired for use by the nonprofit entity for

carrying on its nonprofit activities is considered a sales or use tax liability incurred on direct

purchases by the nonprofit entity. The refund allowed under this subsection does not apply to

purchases of electricity, telecommunications service, ancillary service, piped natural gas, video

programming, or a prepaid meal plan. A request for a refund must be in writing and must include

any information and documentation required by the Secretary. A request for a refund for the first

six months of a calendar year is due the following October 15; a request for a refund for the

second six months of a calendar year is due the following April 15. The aggregate annual refund

amount allowed an entity under this subsection for a fiscal year may not exceed thirty-one

million seven hundred thousand dollars ($31,700,000).

The refunds allowed under this subsection do not apply to an entity that is owned and

controlled by the United States or to an entity that is owned or controlled by the State and is not

listed in this subsection. A hospital that is not listed in this subsection is allowed a semiannual


refund of sales and use taxes paid by it on over-the-counter drugs purchased for use in carrying

out its work. The following nonprofit entities are allowed a refund under this subsection:

(1) Hospitals not operated for profit, including hospitals and medical

accommodations operated by an authority or other public hospital described in

Article 2 of Chapter 131E of the General Statutes.

(2) An organization that is exempt from income tax under section 501(c)(3) of the

Code, other than an organization that is properly classified in any of the

following major group areas of the National Taxonomy of Exempt Entities:

a. Community Improvement and Capacity Building.

b. Public and Societal Benefit.

c. Mutual and Membership Benefit.

(2a) Volunteer fire departments and volunteer emergency medical services squads

that are one or more of the following:

a. Exempt from income tax under the Code.

b. Financially accountable to a city as defined in G.S. 160A-1, a county,

or a group of cities and counties.

(2b) An organization that is a single member LLC that is disregarded for income

tax purposes and satisfies all of the following conditions:

a. The owner of the LLC is an organization that is exempt from income

tax under section 501(c)(3) of the Code.

b. The LLC is a nonprofit entity that would be eligible for an exemption

under 501(c)(3) of the Code if it were not disregarded for income tax

purposes.

c. The LLC is not an organization that would be properly classified in

any of the major group areas of the National Taxonomy of Exempt

Entities listed in subdivision (2) of this subsection.

(3) Repealed by Session Laws 2008-107, s. 28.22(a), effective July 1, 2008, and

applicable to purchases made on or after that date.

(4) Qualified retirement facilities whose property is excluded from property tax

under G.S. 105-278.6A.

(5) A university affiliated nonprofit organization that procures, designs,

constructs, or provides facilities to, or for use by, a constituent institution of

The University of North Carolina. For purposes of this subdivision, a

nonprofit organization includes an entity exempt from taxation as a

disregarded entity of the nonprofit organization.

(c) Certain Governmental Entities. – A governmental entity listed in this subsection is

allowed an annual refund of sales and use taxes paid by it under this Article on direct purchases

of tangible personal property and services. Sales and use tax liability indirectly incurred by a

governmental entity on building materials, supplies, fixtures, and equipment that become a part

of or annexed to any building or structure that is owned or leased by the governmental entity and

is being erected, altered, or repaired for use by the governmental entity is considered a sales or

use tax liability incurred on direct purchases by the governmental entity for the purpose of this

subsection. The refund allowed under this subsection does not apply to purchases of electricity,

telecommunications service, ancillary service, piped natural gas, video programming, or a

prepaid meal plan. A request for a refund must be in writing and must include any information


and documentation required by the Secretary. A request for a refund is due within six months

after the end of the governmental entity's fiscal year.

This subsection applies only to the following governmental entities:

(1) A county.

(2) A city as defined in G.S. 160A-1.

(2a) A consolidated city-county as defined in G.S. 160B-2.

(2b), (2c) Repealed by Session Laws 2005-276, s. 7.51(a), effective July 1, 2005,


(3) A metropolitan sewerage district or a metropolitan water district in this State.

(4) A water and sewer authority created under Chapter 162A of the General

Statutes.

(5) A lake authority created by a board of county commissioners pursuant to an

act of the General Assembly.

(6) A sanitary district.

(7) A regional solid waste management authority created pursuant to G.S.

153A-421.

(8) An area mental health, developmental disabilities, and substance abuse

authority, other than a single-county area authority, established pursuant to

Article 4 of Chapter 122C of the General Statutes.

(9) A district health department, or a public health authority created pursuant to

Part 1A of Article 2 of Chapter 130A of the General Statutes.

(10) A regional council of governments created pursuant to G.S. 160A-470.

(11) A regional planning and economic development commission or a regional

economic development commission created pursuant to Chapter 158 of the

General Statutes.

(12) A regional planning commission created pursuant to G.S. 153A-391.

(13) A regional sports authority created pursuant to G.S. 160A-479.

(14) A public transportation authority created pursuant to Article 25 of Chapter

160A of the General Statutes.

(14a) A facility authority created pursuant to Part 4 of Article 20 of Chapter 160A

of the General Statutes.

(15) A regional public transportation authority created pursuant to Article 26 of

Chapter 160A of the General Statutes, or a regional transportation authority

created pursuant to Article 27 of Chapter 160A of the General Statutes.

(16) A local airport authority that was created pursuant to a local act of the General

Assembly.

(17) A joint agency created by interlocal agreement pursuant to G.S. 160A-462 to

(i) provide fire protection, emergency services, or police protection or (ii)

operate a public broadcasting television station.

(18) Repealed by Session Laws 2001-474, s. 7, effective November 29, 2001.


(20) A constituent institution of The University of North Carolina, but only with

respect to sales and use tax paid by it for tangible personal property or

services that are eligible for refund under this subsection acquired by it

through the expenditure of contract and grant funds.

(21) The University of North Carolina Health Care System.


(22) A regional natural gas district created pursuant to Article 28 of Chapter 160A


(23) A special district created under Article 43 of this Chapter.

(24) A public library created pursuant to an act of the General Assembly or

established pursuant to G.S. 153A-270.

(25) A soil and water conservation district organized under Chapter 139 of the

General Statutes.

(26) A district confinement facility created pursuant to G.S. 153A-219, including a

local act modifying G.S. 153A-219.

(d) Late Applications. – Refunds applied for more than three years after the due date are

barred.

(d1) Alcoholic Beverages. – The refunds authorized by this section do not apply to

purchases of alcoholic beverages, as defined in G.S. 18B-101.

(d2) A city subject to the provisions of G.S. 160A-340.5 is not allowed a refund of sales

and use taxes paid by it under this Article for purchases related to the provision of

communications service as defined in Article 16A of Chapter 160A of the General Statutes.

(e) State Agencies. – The State is allowed quarterly refunds of local sales and use taxes

paid indirectly by the State agency on building materials, supplies, fixtures, and equipment that

become a part of or annexed to a building or structure that is owned or leased by the State agency

and is being erected, altered, or repaired for use by the State agency.

A person who pays local sales and use taxes on building materials or other tangible personal

property for a State building project shall give the State agency for whose project the property

was purchased a signed statement containing all of the following information:

(1) The date the property was purchased.

(2) The type of property purchased.

(3) The project for which the property was used.

(4) If the property was purchased in this State, the county in which it was

purchased.

(5) If the property was not purchased in this State, the county in which the

property was used.

(6) The amount of sales and use taxes paid.

If the property was purchased in this State, the person shall attach a copy of the sales receipt

to the statement. A State agency to whom a statement is submitted shall verify the accuracy of

the statement.

Within 15 days after the end of each calendar quarter, every State agency shall file with the

Secretary a written application for a refund of taxes to which this subsection applies paid by the

agency during the quarter. The application shall contain all information required by the

Secretary. The Secretary shall credit the local sales and use tax refunds directly to the General

Fund.

(f) through (h) Repealed by Session Laws 2010-166, s. 1.17, effective July 1, 2010.

(i) Repealed by Session Laws 1999-360, s. 5, for taxes paid on or after January 1, 2008.

(j) through (o) Repealed by Session Laws 2010-166, s. 1.17, effective July 1, 2010.

(p) Not an Overpayment. Taxes for which a refund is allowed under this section are not

an overpayment of tax and do not accrue interest as provided in G.S. 105-241.21. (1957, c.

1340, s. 5; 1961, c. 826, s. 2; 1963, cc. 169, 1134; 1965, c. 1006; 1967, c. 1110, s. 6; 1969, c.

1298, s. 1; 1971, cc. 89, 286; 1973, c. 476, s. 193; 1977, c. 895, s. 1; 1979, c. 47; c. 801, ss. 77,


79-82; 1983, c. 594, s. 1; c. 891, s. 13; 1983 (Reg. Sess., 1984), c. 1097, s. 7; 1985, cc. 431, 523;

1985 (Reg. Sess., 1986), c. 863, s. 5; 1987, c. 557, ss. 8, 9; c. 850, s. 16; 1987 (Reg. Sess., 1988),

c. 1044, s. 5; 1989, c. 168, s. 5; c. 251; c. 780, s. 1.1; 1989 (Reg. Sess., 1990), c. 936, s. 4; 1991,

c. 356, s. 1; c. 689, s. 190.1(b); 1991 (Reg. Sess., 1992), c. 814, s. 1; c. 917, s. 1; c. 1030, s. 25;

1995, c. 17, s. 8; c. 21, s. 1; c. 458, s. 7; c. 461, s. 13; c. 472, s. 1; 1995 (Reg. Sess., 1996), c.

646, s. 6; 1996, 2nd Ex. Sess., c. 18, s. 15.7(a); 1997-340, s. 1; 1997-393, s. 2; 1997-423, s. 1;

1997-426, s. 5; 1997-502, s. 3; 1998-55, ss. 16, 17; 1998-98, s. 15; 1998-212, ss. 29A.4(a),

29A.14(i), 29A.18(b); 1999-360, ss. 4, 5(a), (b), 9; 1999-438, s. 14; 2000-56, s. 9; 2000-140, s.

92.A(c); 2001-414, s. 1; 2001-474, s. 7; 2003-416, ss. 18(b)-(e), 23; 2003-431, ss. 2, 3;

2003-435, 2nd Ex. Sess., s. 4.1; 2004-110, s. 5.1; 2004-124, s. 32B.1; 2004-170, s. 21(a);

2004-204, 1st Ex. Sess., s. 3; 2005-276, ss. 7.27(a), 7.51(a), 33.12; 2005-429, s. 2.12; 2005-435,

ss. 32(a), 33(a)-(c), 61, 61.1; 2006-33, s. 6; 2006-66, ss. 24.6(a), (b), (c), 24.10(b), 24.13(b),

24A.1(a); 2006-162, ss. 9, 27; 2006-168, s. 3.1; 2006-252, ss. 2.2, 2.3; 2007-323, ss. 31.10(a),

31.20(b), 31.23(d); 2007-345, s. 14.6(a); 2007-491, s. 44(1)a; 2008-107, ss. 28.22(a), 28.23(a),

(b); 2008-118, s. 3.10(a); 2008-154, s. 1; 2009-233, s. 1; 2009-445, ss. 13, 14(a); 2009-527, s.

2(d); 2009-550, s. 4.1; 2010-31, s. 31.5(c), (d); 2010-91, s. 4; 2010-95, s. 4(a); 2010-166, s. 1.17;

2011-84, s. 1(b); 2011-330, s. 26(a); 2012-79, s. 2.11; 2013-316, s. 3.4(b); 2013-414, ss. 12,

42(a), 54(a); 2014-3, s. 8.2(a); 2014-20, s. 1; 2015-235, s. 1.)

§ 105-164.14A. Economic incentive refunds.

(a) Refund. – The following taxpayers are allowed an annual refund of sales and use

taxes paid under this Article:

(1) (Repealed for purchases made on or after January 1, 2016) Passenger air

carrier. – An interstate passenger air carrier is allowed a refund of the sales

and use tax paid by it on fuel in excess of two million five hundred thousand

dollars ($2,500,000). The amount of sales and use tax paid does not include a

refund allowed to the interstate passenger air carrier under G.S.

105-164.14(a). This subdivision is repealed for purchases made on or after

January 1, 2016.

(2) Major recycling facility. – An owner of a major recycling facility is allowed a

refund of the sales and use tax paid by it on building materials, building

supplies, fixtures, and equipment that become a part of the real property of the

recycling facility. Liability incurred indirectly by the owner for sales and use

taxes on these items is considered tax paid by the owner.

(3) Business in low-tier area. – A taxpayer that is engaged primarily in one of the

businesses listed in G.S. 105-129.83(a) in a development tier one area and that

places machinery and equipment in service in that area is allowed a refund of

the sales and use tax paid by it on the machinery and equipment. For purposes

of this subdivision, "machinery and equipment" includes engines, machinery,

equipment, tools, and implements used or designed to be used in one of the

businesses listed in G.S. 105-129.83, capitalized for tax purposes under the

Code, and not leased to another party. Liability incurred indirectly by the

taxpayer for sales and use taxes on these items is considered tax paid by the

taxpayer. The sunset for Article 3J of Chapter 105 of the General Statutes for

development tier one areas applies to this subdivision.


(4) (Repealed for purchases made on or after January 1, 2020) Motorsports

team or sanctioning body. – A professional motorsports racing team, a

motorsports sanctioning body, or a related member of such a team or body is

allowed a refund of the sales and use tax paid by it in this State on aviation

fuel that is used to travel to or from a motorsports event in this State, to travel

to a motorsports event in another state from a location in this State, or to travel

to this State from a motorsports event in another state. For purposes of this

subdivision, a "motorsports event" includes a motorsports race, a motorsports

sponsor event, and motorsports testing. This subdivision is repealed for

purchases made on or after January 1, 2020.

(5) (Repealed for purchases made on or after January 1, 2020) Professional

motorsports team. – A professional motorsports racing team or a related

member of a team is allowed a refund of fifty percent (50%) of the sales and

use tax paid by it in this State on tangible personal property, other than tires or

accessories, that comprises any part of a professional motorsports vehicle. For

purposes of this subdivision, "motorsports accessories" includes

instrumentation, telemetry, consumables, and paint. This subdivision is

repealed for purchases made on or after January 1, 2020.

(6) (Repealed for purchases made on or after January 1, 2014) Analytical

services business. – A taxpayer engaged in analytical services in this State is

allowed a refund of sales and use tax paid by it. This subdivision is repealed

for purchases made on or after January 1, 2014. The amount of the refund is

the greater of the following:

a. Fifty percent (50%) of the eligible amount of sales and use tax paid by

it on tangible personal property that is consumed or transformed in

analytical service activities. The eligible amount of sales and use tax

paid by the taxpayer in this State is the amount by which sales and use

tax paid by the taxpayer in this State in the fiscal year exceed the

amount paid by the taxpayer in this State in the 2006-2007 State fiscal

year.

b. Fifty percent (50%) of the amount of sales and use tax paid by it in the

fiscal year on medical reagents.

(7) (Repealed for purchases made on or after January 1, 2038) Railroad

intermodal facility. – The owner or lessee of an eligible railroad intermodal

facility is allowed a refund of sales and use tax paid by it under this Article on

building materials, building supplies, fixtures, and equipment that become a

part of the real property of the facility. Liability incurred indirectly by the

owner or lessee of the facility for sales and use taxes on these items is

considered tax paid by the owner or lessee. This subdivision is repealed for

purchases made on or after January 1, 2038.

(b) Administration. – A request for a refund must be in writing and must include any

information and documentation required by the Secretary. A request for a refund is due within

six months after the end of the State's fiscal year. Refunds applied for after the due date are

barred.

(c) Report. – The Department must include in the economic incentives report required by

G.S. 105-256 the following information itemized by refund and by taxpayer:


(1) The number of taxpayers claiming a refund allowed in this section.

(2) The total amount of purchases with respect to which refunds were claimed.

(3) The total cost to the General Fund of the refunds claimed.

(d) Not an Overpayment. – Taxes for which a refund is allowed under this section are not

an overpayment of tax and do not accrue interest as provided in G.S. 105-241.21. (2010-166, s.

1.18; 2011-330, ss. 15(c), 20(a), 26(b); 2012-36, s. 11(a); 2013-316, s. 3.5(a); 2015-259, s. 6(d).)

§ 105-164.14B. (Repealed for sales made on or after January 1, 2014) Certain industrial

facilities refunds.


(1) Air courier services. – The furnishing of air delivery of individually addressed

letters and packages for compensation, except by the United States Postal

Service.

(2) Aircraft manufacturing. – The manufacturing or assembling of complete

aircraft or of aircraft engines, blisks, fuselage sections, flight decks, flight

deck systems or components, wings, fuselage fairings, fins, moving leading

and trailing wing edges, wing boxes, nose sections, tailplanes, passenger

doors, nacelles, thrust reversers, landing gear, braking systems, or any

combination of these.

(3) Bioprocessing. – Biomanufacturing or processing that includes the culture of

cells to make commercial products, the purification of biomolecules from

cells, or the use of these molecules in manufacturing.

(4) Reserved.

(5) Reserved.

(6) Facility. – A single building or structure or a group of buildings or structures

that are located on a single parcel of land or on contiguous parcels of land

under common ownership and any other related real property contained on the

parcel or parcels.

(7) Financial services, securities operations, and related systems development. –

One or both of the following functions:

a. Performing analysis, operations, trading, or sales functions for

investment banking, securities dealing and brokering, securities

trading and underwriting, investment portfolio or mutual fund

management, retirement services, or employee benefit administration.

b. Developing information technology systems and applications,

managing and enhancing operating applications and databases, or

providing, operating, and maintaining telecommunications networks

and distributed and mainframe computing resources for investment

banking, securities dealing and brokering, securities trading and

underwriting, investment portfolio or mutual fund management,

retirement services, or employee benefit administration.

(8) Reserved.

(9) Reserved.

(10) Reserved.

(11) Motor vehicle manufacturing. – Any of the following:

a. Manufacturing complete automobiles and light-duty motor vehicles.


b. Manufacturing heavy-duty truck chassis and assembling complete

heavy-duty trucks, buses, heavy-duty motor homes, and other special

purpose heavy-duty motor vehicles for highway use.

c. Manufacturing complete military armored vehicles, nonarmored

military universal carriers, combat tanks, and specialized components

for combat tanks.

(12) Owner. – The term includes a lessee under a capital lease.

(13) Paper-from-pulp manufacturing. – An industry primarily engaged in

manufacturing or converting paper, other than newsprint or uncoated

groundwood paper, from pulp or pulp products, or in converting purchased

sanitary paper stock or wadding into sanitary paper products.

(14) Pharmaceutical and medicine manufacturing and distribution of

pharmaceuticals and medicines. – Any of the following:

a. Manufacturing biological and medicinal products. For purposes of this

sub-subdivision, a biological product is a preparation that is

synthesized from living organisms or their products and used

medically as a diagnostic, preventive, or therapeutic agent. For the

purpose of this sub-subdivision, bacteria, viruses, and their parts are

considered living organisms.

b. Processing botanical drugs and herbs by grading, grinding, and

milling.

c. Isolating active medicinal principals from botanical drugs and herbs.

d. Manufacturing pharmaceutical products intended for internal and

external consumption in forms such as ampoules, tablets, capsules,

vials, ointments, powders, solutions, and suspensions.

(15) Reserved.

(16) Reserved.

(17) Related entity. – An entity for which the taxpayer possesses directly or

indirectly at least eighty percent (80%) of the control and value.

(18) Semiconductor manufacturing. – The development and production of

semiconductor material, devices, or components.

(19) Solar electricity generating materials manufacturing. – The development and

production of one or more of the following:

a. Photovoltaic materials or modules used in producing electricity.

b. Polymers or polymer films primarily intended for incorporation into

photovoltaic materials or modules used in producing electricity.

(20) Repealed by Session Laws 2011-3, s. 1(a), effective July 1, 2010, and


(21) Reserved.

(22) Turbine manufacturing. – An industry primarily engaged in manufacturing

turbines or complete turbine generator set units, such as steam, hydraulic, gas,

and wind. The term does not include the manufacturing of aircraft turbines.

(b) Refund. – An owner of an industrial facility that meets the business, minimum

investment, and industry-specific requirements of this section is allowed an annual refund of

sales and use tax paid by it under this Article on building materials, building supplies, fixtures,

and equipment that are installed in the construction of the facility and that become a part of the


real property of the facility. Liability incurred indirectly by the owner for sales and use taxes on

those items is considered tax paid by the owner. The requirements are:

(1) Business requirement. – The facility is primarily engaged in one or more of

the following:

a. Air courier services.

b. Aircraft manufacturing.

c. Bioprocessing.

d. Financial services, securities operations, and related systems

development.

e. Motor vehicle manufacturing.

e1. Paper-from-pulp manufacturing.

f. Pharmaceutical and medicine manufacturing and distribution of

pharmaceuticals and medicines.

g. Semiconductor manufacturing.

h. Solar electricity generating materials manufacturing.

i. Turbine manufacturing.

(2) Minimum investment requirement. – The Secretary of Commerce has certified

that the owner of the facility will invest at least the required amount of private

funds to construct the facility in this State. For the purpose of this subsection,

costs of construction may include costs of acquiring and improving land for

the facility and costs of equipment for the facility. If the facility is located in a

development tier one area, the required amount is fifty million dollars

($50,000,000). For all other facilities, the required amount is one hundred

million dollars ($100,000,000). The owner may invest these funds either

directly or indirectly through a related entity.

(3) Industry-specific requirements:

a. If the facility is primarily engaged in financial services, securities

operations, and related systems development, it satisfies all of the


1. It is owned and operated by the business for which the services

are provided or by a related entity of that business as defined in

G.S. 105-130.7A.

2. No part of it is leased to a third-party tenant that is not a related

entity of the business.

b. If the facility is primarily engaged in solar electricity generating

materials manufacturing, the business satisfies a wage standard at the

facility. The wage standard is equal to one hundred five percent

(105%) of the lesser of the average weekly wage for all insured private

employers in the State and the average weekly wage for all insured

private employers in the county. A business satisfies the wage standard

if it pays an average weekly wage that is at least equal to the amount

required by this sub-subdivision. In making the wage calculation, the

business must include any jobs that were filled for at least 1,600 hours

during the calendar year.

(c) Forfeiture. – If the owner of an eligible facility does not make the required minimum

investment within five years after the first refund under this section with respect to the facility,


the facility loses its eligibility and the owner forfeits all refunds already received under this

subsection. Upon forfeiture, the owner is liable for tax under this Article equal to the amount of

all past taxes refunded under this section, plus interest at the rate established in G.S. 105-241.21,

computed from the date each refund was issued. The tax and interest are due 30 days after the

date of the forfeiture. A person that fails to pay the tax and interest is subject to the penalties

provided in G.S. 105-236.

(d) Administration. – A request for a refund must be in writing and must include any

information and documentation required by the Secretary. A request for a refund is due within

six months after the end of the State's fiscal year. Refunds applied for after the due date are

barred.

(e) Report. – The Department must include in the economic incentives report required by

G.S. 105-256 the following information itemized by refund and taxpayer:

(1) The number of taxpayers claiming a refund allowed in this section.

(2) The total amount of purchases with respect to which refunds were claimed.

(3) The location of facilities with respect to which refunds were claimed.

(4) The total cost to the General Fund of the refunds claimed.

(f) Sunset. – This section is repealed for sales made on or after January 1, 2014.

(g) Not an Overpayment. – Taxes for which a refund is allowed under this section are not

an overpayment of tax and do not accrue interest as provided in G.S. 105-241.21. (2010-166, s.

1.19; 2011-3, ss. 1(a), (b); 2011-330, s. 26(c); 2012-36, s. 11(b).)

Part 4. Reporting and Payment.

§ 105-164.15: Repealed by Session Laws 2010-95, s. 13, effective July 17, 2010.

§ 105-164.15A. Effective date of tax changes.

(a) General Rate Items. – The effective date of a tax change for tangible personal

property, digital property, or services taxable under this Article is administered as follows:

(1) For a taxable item that is provided and billed on a monthly or other periodic

basis:

a. A new tax or a tax rate increase applies to the first billing period that is

at least 30 days after enactment and that starts on or after the effective

date.

b. A tax repeal or a tax rate decrease applies to bills rendered on or after

the effective date.

(2) For a taxable item that is not billed on a monthly or other periodic basis, a tax

change applies to amounts received for items provided on or after the effective

date, except amounts received for items provided under a lump-sum or

unit-price contract entered into or awarded before the effective date or entered

into or awarded pursuant to a bid made before the effective date.

(b) Combined Rate Items. – The effective date of a rate change for an item that is taxable

under this Article at the combined general rate is the effective date of any of the following:

(1) The effective date of a change in the State general rate of tax set in G.S.

105-164.4.

(2) For an increase in the authorization for local sales and use taxes, the date on

which local sales and use taxes authorized by Subchapter VIII of this Chapter


for every county become effective in the first county or group of counties to

levy the authorized taxes.

(3) For a repeal in the authorization for local sales and use taxes, the effective

date of the repeal. (2005-276, s. 33.13; 2006-162, s. 10; 2007-323, s.

31.17(c); 2009-451, s. 27A.3(l); 2011-330, s. 27; 2013-316, s. 3.2(c).)

§ 105-164.16. Returns and payment of taxes.

(a) General. – Sales and use taxes are payable when a return is due. A return is due

quarterly or monthly as specified in this section. A return must be filed with the Secretary on a

form prescribed by the Secretary and in the manner required by the Secretary. A return must be

signed by the taxpayer or the taxpayer's agent.

A sales tax return must state the taxpayer's gross sales for the reporting period, the amount

and type of sales made in the period that are exempt from tax under G.S. 105-164.13 or are

elsewhere excluded from tax, the amount of tax due, and any other information required by the

Secretary. A use tax return must state the purchase price of tangible personal property, digital

property, or services that were purchased or received during the reporting period and are subject

to tax under G.S. 105-164.6, the amount of tax due, and any other information required by the

Secretary. Returns that do not contain the required information will not be accepted. When an

unacceptable return is submitted, the Secretary will require a corrected return to be filed.

(b) Quarterly. – A taxpayer who is consistently liable for less than one hundred dollars

($100.00) a month in State and local sales and use taxes must file a return and pay the taxes due

on a quarterly basis. A quarterly return covers a calendar quarter and is due by the last day of the

month following the end of the quarter.

(b1) Monthly. – A taxpayer who is consistently liable for at least one hundred dollars

($100.00) but less than twenty thousand dollars ($20,000) a month in State and local sales and

use taxes must file a return and pay the taxes due on a monthly basis. A monthly return is due by

the 20th day of the month following the calendar month covered by the return.

(b2) Prepayment. – A taxpayer who is consistently liable for at least twenty thousand

dollars ($20,000) a month in State and local sales and use taxes must make a monthly

prepayment of the next month's tax liability. The prepayment is due on the date a monthly return

is due. The prepayment must equal at least sixty-five percent (65%) of any of the following:

(1) The amount of tax due for the current month.

(2) The amount of tax due for the same month in the preceding year.

(3) The average monthly amount of tax due in the preceding calendar year.

(b3) Category. – The Secretary must monitor the amount of State and local sales and use

taxes paid by a taxpayer or estimate the amount of taxes to be paid by a new taxpayer and must

direct each taxpayer to pay tax and file returns as required by this section. In determining the

amount of taxes due from a taxpayer, the Secretary must consider the total amount due from all

places of business owned or operated by the same person as the amount due from that person. A

taxpayer must file a return and pay tax in accordance with the Secretary's direction.

(c) Repealed by Session Laws 2001-427, s. 6(a), effective January 1, 2002, and

applicable to taxes levied on or after that date.

(d) Use Tax on Out-of-State Purchases. – Use tax payable by an individual who

purchases the items listed in this subsection outside the State for a nonbusiness purpose is due on

an annual basis. For an individual who is not required to file an individual income tax return

under Part 2 of Article 4 of this Chapter, the annual reporting period ends on the last day of the


calendar year and a use tax return is due by the following April 15. For an individual who is

required to file an individual income tax return, the annual reporting period ends on the last day

of the individual's income tax year, and the use tax must be paid on the income tax return as

provided in G.S. 105-269.14. The items are:

(1) Tangible personal property other than a boat or an aircraft.

(2) Digital property.

(3) A service.

(e) Simultaneous State and Local Changes. – When State and local sales and use tax rates

change on the same date because one increases and the other decreases but the combined rate

does not change, sales and use taxes payable on the following periodic payments are reportable

in accordance with the changed State and local rates:

(1) Lease or rental payments billed after the effective date of the changes.

(2) Installment sale payments received after the effective date of the changes by a

taxpayer who reports the installment sale on a cash basis. (1957, c. 1340, s. 5;

1967, c. 1110, s. 6; 1973, c. 476, s. 193; 1979, c. 801, s. 83; 1983 (Reg. Sess.,

1984), c. 1097, s. 14; 1985, c. 656, s. 26; 1985 (Reg. Sess., 1986), c. 1007;

1987, c. 557, s. 6; 1989 (Reg. Sess., 1990), c. 945, s. 1; 1991, c. 690, s. 4;

1993, c. 450, s. 7; 1997-77, s. 1; 1998-121, s. 1; 1999-341, s. 1; 2000-120, s.

11; 2001-347, s. 2.14; 2001-414, s. 18; 2001-427, s. 6(a); 2001-430, s. 7;

2002-184, ss. 10, 11; 2003-284, ss. 44.1, 45.8; 2003-416, s. 26; 2005-276, s.

33.24; 2006-162, s. 5(b); 2006-33, s. 9; 2007-527, ss. 11, 12; 2008-134, s. 11;

2009-451, s. 27A.3(b), (c), (m); 2010-31, s. 31.3(a)-(d); 2010-95, s. 42;

2011-330, s. 21.)

§ 105-164.16A. Reporting option for prepaid meal plans.

This section provides a retailer that offers a prepaid meal plan subject to the tax imposed by

G.S. 105-164.4 with an option concerning the method by which the sales tax will be remitted to

the Secretary and a return filed under G.S. 105-164.16. When the retailer enters into an

agreement with a food service contractor by which the food service contractor agrees to provide

food or prepared food under a prepaid meal plan, and the food service contractor with whom the

retailer contracts is also a retailer under this Article, the retailer may include in the agreement

that the food service contractor is liable for reporting and remitting the sales tax due on the gross

receipts derived from the prepaid meal plan on behalf of the retailer. The agreement must

provide that the tax applies to the allocated sales price of the prepaid meal plan paid by or on

behalf of the person entitled to the food or prepaid food under the plan and not the amount

charged by the food service contractor to the retailer under the agreement for the food and

prepared food for the person.

A retailer who elects this option must report to the food service contractor with whom it has

an agreement the gross receipts a person pays to the retailer for a prepaid meal plan. The retailer

must report the gross receipts on an accrual basis of accounting, as required under G.S.

105-164.20. The retailer must send the food service contractor the tax due on the gross receipts

derived from a prepaid meal plan. Tax payments received by a food service contractor from a

retailer are held in trust by the food service contractor for remittance to the Secretary. A food

service contractor that receives a tax payment from a retailer must remit the amount received to

the Secretary. A food service contractor is not liable for tax due but not received from a retailer.

A retailer that does not send the food service contractor the tax due on the gross receipts derived


from a prepaid meal plan is liable for the amount of tax the retailer fails to send to the food

service contractor. (2014-3, s. 4.1(f); 2015-6, s. 2.14(a).)

§§ 105-164.17 through 105-164.18: Repealed by Session Laws 1993, c. 450, ss. 8, 9.

§ 105-164.19. Extension of time for making returns and payment.

The Secretary for good cause may extend the time for filing any return under the provisions

of this Article and may grant additional time within which to file the return as he may deem

proper, but the time for filing any return shall not be extended for more than 30 days after the

regular due date of the return. If the time for filing a return is extended, interest accrues at the

rate established pursuant to G.S. 105-241.21 from the time the return was due to be filed to the

date of payment. (1957, c. 1340, s. 5; 1973, c. 476, s. 193; 1977, c. 1114, s. 10; 1985, c. 656, s.

30; 2007-491, s. 44(1)a; 2013-414, s. 1(f).)

§ 105-164.20. Cash or accrual basis of reporting.

(a) Basis Selected. – Except as provided in subsection (b) of this section, a retailer may

report sales on either the cash or accrual basis of accounting upon making application to the

Secretary for permission to use the basis selected. Permission granted by the Secretary to report

on a selected basis continues in effect until revoked by the Secretary or the taxpayer receives

permission from the Secretary to change the basis selected.

(b) Accrual Basis. – For purposes of reporting and remitting sales tax under this Article, a

retailer listed in this subsection must report the gross receipts it derives from the taxable

transaction listed in this subsection on an accrual basis of accounting. The following retailers

must report gross receipts as provided in this subsection:

(1) A retailer who sells electricity, piped natural gas, or telecommunications

service. A sale of electricity, piped natural gas, or telecommunications service

is considered to accrue when the retailer bills its customer for the sale.

(2) A retailer who derives gross receipts from a prepaid meal plan,

notwithstanding that the retailer may report tax on the cash basis for other

sales at retail and notwithstanding that the revenue has not been recognized

for accounting purposes.

(3) A retailer who sells or derives gross receipts from a service contract, as

provided in G.S. 105-164.4I(d). (1957, c. 1340, s. 5; 1973, c. 476, s. 193;

1983 (Reg. Sess., 1984), c. 1097, s. 15; 1998-22, s. 7; 2001-430, s. 8; 2015-6,

s. 2.14(b).)

§ 105-164.21. Repealed by Session Laws 1987, c. 622, s. 10.

§ 105-164.21A: Repealed by Session Laws 2013-316, s. 4.1(a), effective July 1, 2014, and


§ 105-164.21B: Repealed by Session Laws 2006-151, s. 9, effective January 1, 2007.

Part 5. Records Required to Be Kept.

§ 105-164.22. Record-keeping requirements, inspection authority, and effect of failure to

keep records.


Retailers, wholesale merchants, and consumers must keep for a period of three years records

that establish their tax liability under this Article. The Secretary or a person designated by the

Secretary may inspect these records at any reasonable time during the day.

A retailer's records must include records of the retailer's gross income, gross sales, net

taxable sales, and all items purchased for resale. Failure of a retailer to keep records that

establish that a sale is exempt under this Article subjects the retailer to liability for tax on the

sale.

A wholesale merchant's records must include a bill of sale for each customer that contains the

name and address of the purchaser, the date of the purchase, the item purchased, and the price at

which the wholesale merchant sold the item. Failure of a wholesale merchant to keep these

records for the sale of an item subjects the wholesale merchant to liability for tax at the rate that

applies to the retail sale of the item.

A consumer's records must include an invoice or other statement of the purchase price of an

item the consumer purchased from outside the State. Failure of the consumer to keep these

records subjects the consumer to liability for tax on the purchase price of the item, as determined

by the Secretary. (1957, c. 1340, s. 5; 1973, c. 476, s. 193; 1998-98, s. 51; 2009-451, s.

27A.3(n).)

§ 105-164.23: Repealed by Session Laws 2009-451, s. 27A.3(o), effective August 7, 2009.



§ 105-164.26. Presumption that sales are taxable.

For the purpose of the proper administration of this Article and to prevent evasion of the

retail sales tax, the following presumptions apply:

(1) That all gross receipts of wholesale merchants and retailers are subject to the

retail sales tax until the contrary is established by proper records as required in

this Article.

(2) That tangible personal property sold by a person for delivery in this State is

sold for storage, use, or other consumption in this State.

(3) That tangible personal property delivered outside this State and brought to this

State by the purchaser is for storage, use, or consumption in this State.

(4) That digital property sold for delivery or access in this State is sold for

storage, use, or consumption in this State.

(5) That a service purchased for receipt in this State is purchased for storage, use,

or consumption in this State. (1957, c. 1340, s. 5; 1998-98, s. 108; 2009-451,

s. 27A.3(p).)


§ 105-164.27A. Direct pay permit.

(a) General. – A general direct pay permit authorizes its holder to purchase any tangible

personal property, digital property, or service without paying tax to the seller and authorizes the

seller to not collect any tax on a sale to the permit holder. A person who purchases an item under


a direct pay permit issued under this subsection is liable for use tax due on the purchase. The tax

is payable when the property is placed in use or the service is received. A direct pay permit

issued under this subsection does not apply to taxes imposed under G.S. 105-164.4 on sales of

electricity or the gross receipts derived from rentals of accommodations.

A person who purchases an item for storage, use, or consumption in this State whose tax

status cannot be determined at the time of the purchase because of one of the reasons listed

below may apply to the Secretary for a general direct pay permit:

(1) The place of business where the item will be stored, used, or consumed is not

known at the time of the purchase and a different tax consequence applies

depending on where the item is used.

(2) The manner in which the item will be stored, used, or consumed is not known

at the time of the purchase and one or more of the potential uses is taxable but

others are not taxable.

(a1) Direct Mail. – A person who purchases direct mail may apply to the Secretary for a

direct pay permit for the purchase of direct mail. A direct pay permit issued for direct mail does

not apply to any purchase other than the purchase of direct mail. A person who purchases direct

mail under a direct pay permit must file a return and pay the tax due monthly or quarterly to the

Secretary.

(a2) Qualified Jet Engine. – A person who purchases a qualified jet engine may apply to

the Secretary for a direct pay permit for the purchase of a qualified jet engine. A direct pay

permit issued for a qualified jet engine does not apply to any purchase other than the purchase of

a qualified jet engine. The maximum use tax on a qualified jet engine is two thousand five

hundred dollars ($2,500). A person who purchases a qualified jet engine under a direct pay

permit must file a return and pay the tax due monthly to the Secretary.

(b) Telecommunications Service. – A direct pay permit for telecommunications service

authorizes its holder to purchase telecommunications service and ancillary service without

paying tax to the seller and authorizes the seller to not collect any tax on a sale to the permit

holder. A person who purchases these services under a direct pay permit must file a return and

pay the tax due monthly or quarterly to the Secretary. A direct pay permit issued under this

subsection does not apply to any tax other than the tax on telecommunications service and

ancillary service.

A call center that purchases telecommunications service that originates outside this State and

terminates in this State may apply to the Secretary for a direct pay permit for

telecommunications service and ancillary service. A call center is a business that is primarily

engaged in providing support services to customers by telephone to support products or services

of the business. A business is primarily engaged in providing support services by telephone if at

least sixty percent (60%) of its calls are incoming.

(c) Application. – An application for a direct pay permit must be made on a form

provided by the Secretary and contain the information required by the Secretary. The Secretary

may grant the application if the Secretary finds that the applicant complies with the sales and use

tax laws and that the applicant's compliance burden will be greatly reduced by use of the permit.

(d) Revocation. – A direct pay permit is valid until the holder returns it to the Secretary

or the Secretary revokes it. The Secretary may revoke a direct pay permit if the holder of the

permit does not file a sales and use tax return on time, does not pay sales and use tax on time, or

otherwise fails to comply with the sales and use tax laws. (2000-120, s. 1; 2001-414, s. 20;


2001-430, s. 9; 2002-72, s. 18; 2003-284, s. 45.9; 2003-416, s. 16(b); 2006-33, s. 7; 2009-451, s.

27A.3(q); 2012-79, s. 2.12; 2013-414, s. 13; 2015-259, s. 4.2(e).)

§ 105-164.28. Certificate of exemption.

(a) Relief From Liability. – Except as provided in subsection (b) of this section, a seller

is not liable for the tax otherwise applicable if the Secretary determines that a purchaser

improperly claimed an exemption, or if the seller within 90 days of the sale meets the following

requirements:

(1) For a sale made in person, the seller obtains a certificate of exemption or a

blanket certificate of exemption from a purchaser with which the seller has a

recurring business relationship. If the purchaser provides a paper certificate,

the certificate must be signed by the purchaser and state the purchaser's name,

address, certificate of registration number, reason for exemption, and type of

business. For purposes of this subdivision, a certificate received by fax is a

paper certificate. If the purchaser does not provide a paper certificate, the

seller must obtain and maintain the same information required had a

certificate been provided by the purchaser.

(2) Repealed by Session Laws 2013-414, s. 43(a), effective August 23, 2013.

(3) For a sale made over the Internet or by other remote means, the seller obtains

the purchaser's name, address, certificate of registration number, reason for

exemption, and type of business and maintains this information in a

retrievable format in its records. If a certificate of exemption is provided

electronically for a remote sale, the requirements of subdivision (1) of this

subsection apply except the electronic certificate is not required to be signed

by the purchaser.

(4) In the case of drop shipment sales, a third-party vendor obtains a certificate of

exemption provided by its customer or any other acceptable information

evidencing qualification for a resale exemption, regardless of whether the

customer is registered to collect and remit sales and use tax in the State.

(b) Substantiation Request. – If the Secretary determines that a certificate of exemption

or the required data elements obtained by the seller are incomplete, the Secretary may request

substantiation from the seller. A seller is not required to verify that a certificate of registration

number provided by a purchaser is correct. If a seller does one of the following within 120 days

after a request for substantiation by the Secretary, the seller is not liable for the tax otherwise

applicable:

(1) Obtains a fully completed certificate of exemption from the purchaser

provided in good faith. The certificate is provided in good faith if it claims an

exemption that meets all of the following conditions:

a. It was statutorily available in this State on the date of the transaction.

b. It could be applicable to the item being purchased.

c. It is reasonable for the purchaser's type of business.

(2) Obtains other information to establish the transaction was not subject to tax.

(c) Fraud. – The relief from liability under this section does not apply to a seller who

does any of the following:

(1) Fraudulently fails to collect tax.

(2) Solicits purchasers to participate in the unlawful claim of an exemption.


(3) Accepts an exemption certificate when the purchaser claims an entity-based

exemption when the subject of the transaction sought to be covered by the

exemption certificate is received by the purchaser at a location operated by the

seller, and the claimed exemption is not available in this State.

(4) Had knowledge or had reason to know at the time information was provided

relating to the exemption claimed that the information was materially false.

(5) Knowingly participated in activity intended to purposefully evade tax properly

due on the transaction.

(d) Purchaser's Liability. – A purchaser who does not resell an item purchased under a

certificate of exemption is liable for any tax subsequently determined to be due on the sale.

(e) Renewal of Information. – The Secretary may not require a seller to renew a blanket

certificate of exemption or to update exemption certificate information or data elements when

there is a recurring business relationship between the buyer and seller. For purposes of this

section, a recurring business relationship exists when a period of no more than 12 months elapse

between sales transactions. (1957, c. 1340, s. 5; 1973, c. 476, s. 193; 1991 (Reg. Sess., 1992), c.

914, s. 1; 2000-120, s. 6; 2005-276, s. 33.15; 2009-451, s. 27A.3(r); 2011-330, s. 28; 2013-414,

s. 43(a).)

§ 105-164.28A. Other exemption certificates.

(a) Authorization. – The Secretary may require a person who purchases an item that is

exempt from tax or is subject to a preferential rate of tax depending on the status of the purchaser

or the intended use of the item to obtain an exemption certificate from the Department to receive

the exemption or preferential rate. The Department must issue a preferential rate or use-based

exemption number to a person who qualifies for the exemption or preferential rate. A person who

no longer qualifies for a preferential rate or use-based exemption number must notify the

Secretary within 30 days to cancel the number.

An exemption certificate issued by the purchaser authorizes a retailer to sell an item to the

holder of the certificate and either collect tax at a preferential rate or not collect tax on the sale,

as appropriate. A person who no longer qualifies for an exemption certificate must give notice to

each seller that may rely on the exemption certificate on or before the next purchase. A person

who purchases an item under an exemption certificate is liable for any tax due on the purchase if

the Department determines that the person is not eligible for the exemption certificate or if the

person purchased items that do not qualify for an exemption under the exemption certificate. The

liability is relieved when the seller obtains the purchaser's name, address, type of business,

reason for exemption, and exemption number in lieu of obtaining an exemption certificate.

(b) Scope. – This section does not apply to a direct pay permit or a certificate of

exemption. G.S. 105-164.27A addresses a direct pay permit, and G.S. 105-164.28 addresses a

certificate of exemption.

(c) Administration. – This section shall be administered in accordance with G.S.

105-164.28. Additionally, the provisions of this section may also apply to a conditional

exemption certificate issued to a person in accordance with G.S. 105-164.13E. (2002-184, s. 12;

2009-451, s. 27A.3(s); 2013-414, s. 43(b); 2014-3, s. 3.1(b).)

§ 105-164.29. Application for certificate of registration by wholesale merchants, retailers,

and facilitators.


(a) Requirement and Application. – Before a person may engage in business as a retailer

or a wholesale merchant or when a facilitator is liable for tax under G.S. 105-164.4F, the person

must obtain a certificate of registration. To obtain a certificate of registration, a person must

register with the Department. A person who has more than one business is required to obtain

only one certificate of registration for each legal entity to cover all operations of each business

throughout the State. An application for registration must be signed as follows:

(1) By the owner, if the owner is an individual.

(2) By a manager, member, or company official, if the owner is a limited liability

company.

(2a) By a manager, member, or partner, if the owner is a partnership.

(3) By an executive officer or some other person specifically authorized by the

corporation to sign the application, if the owner is a corporation. If the

application is signed by a person authorized to do so by the corporation,

written evidence of the person's authority must be attached to the application.

(b) Issuance. – A certificate of registration is not assignable and is valid only for the

person in whose name it is issued. A copy of the certificate of registration must be displayed at

each place of business.

(c) Term. – A certificate of registration is valid unless it is revoked for failure to comply

with the provisions of this Article or becomes void. A certificate issued to a retailer who makes

taxable sales or a facilitator liable for tax under G.S. 105-164.4F becomes void if, for a period of

18 months, the retailer or facilitator files no returns or files returns showing no sales.

(d) Revocation. – The failure of a wholesale merchant or retailer to comply with this

Article or G.S. 14-401.18 or the failure of a facilitator to comply with this Article is grounds for

revocation of the person's certificate of registration. Before the Secretary revokes a person's

certificate of registration, the Secretary must notify the person that the Secretary proposes to

revoke the certificate of registration and that the proposed revocation will become final unless

the person objects to the proposed revocation and files a request for a Departmental review

within the time set in G.S. 105-241.11 for requesting a Departmental review of a proposed

assessment. The notice must be sent in accordance with the methods authorized in G.S.

105-241.20. The procedures in Article 9 of this Chapter for review of a proposed assessment

apply to the review of a proposed revocation.

(e) Definition. – For purposes of this section, the term "person" means a wholesale

merchant, a retailer, or a facilitator. (1957, c. 1340, s. 5; 1973, c. 476, s. 193; 1979, 2nd Sess., c.

1084; 1991, c. 690, s. 5; 1993, c. 354, s. 17; c. 539, s. 705; 1994, Ex. Sess., c. 24, s. 14(c);

1999-333, s. 8; 2000-140, s. 67(b); 2007-491, s. 19; 2009-451, s. 27A.3(t); 2014-3, s. 14.9(b);

2015-6, s. 2.15.)

§ 105-164.29A. State government exemption process.

(a) Application. – To be eligible for the exemption provided in G.S. 105-164.13(52), a

State agency must obtain from the Department a sales tax exemption number. The application for

exemption must be in the form required by the Secretary, be signed by the State agency's head,

and contain any information required by the Secretary. The Secretary must assign a sales tax

exemption number to a State agency that submits a proper application.

(b) Liability. – A State agency that does not use the items purchased with its exemption

number must pay the tax that should have been paid on the items purchased, plus interest


calculated from the date the tax would otherwise have been paid. (2003-431, s. 4; 2004-170, s.

22.)

§ 105-164.29B. Information to counties and cities.

The Secretary must give information on refunds of tax made under this Article to a

designated county or city official within 30 days after the official makes a written request to the

Secretary for the information. For a request made by a county official, the Secretary must give

the official a list of each claimant that received a refund in the past 12 months of at least one

thousand dollars ($1,000) of tax paid to the county. For a request made by a city official, the

Secretary must give the official a list of each claimant that received a refund in the past 12

months of at least one thousand dollars ($1,000) of tax paid to all the counties in which the city is

located. The list must include the name and address of each of these claimants and the amount of

the refund received from each county covered by the request.

A claimant that has received a refund under this Article of tax paid to a county must give

information on the refund to a designated official of the county or a city located in the county.

The claimant must give the information to the county or city official within 30 days after the

official makes a written request to the claimant for the information. For a request by a county or

city official, the claimant must give the official a copy of the request for the refund and any

supporting documentation requested by the official to verify the request. If a claimant determines

that a refund it has received under this Article is incorrect, the claimant must file an amended

request for a refund.

For purposes of this section, a designated county official is the chair of the board of county

commissioners or a county official designated in a resolution adopted by the Board, and a

designated city official is the mayor of the city or a city official designated in a resolution

adopted by the city's governing board. Information given to a county or city official under this

section is not a public record and may not be disclosed except as provided in G.S. 153A-148.1 or

G.S. 160A-208.1. (2010-166, s. 1.20.)

Part 6. Examination of Records.

§ 105-164.30. Secretary or agent may examine books, etc.

For the purpose of enforcing the collection of the tax levied by this Article, the Secretary or

his duly authorized agent is authorized to examine at all reasonable hours during the day the

books, papers, records, documents or other data of all retailers or wholesale merchants bearing

upon the correctness of any return or for the purpose of filing a return where none has been made

as required by this Article, and may require the attendance of any person and take his testimony

with respect to any such matter, with power to administer oaths to such person or persons. If any

person summoned as a witness fails to obey any summons to appear before the Secretary or his

authorized agent, or refuses to testify or answer any material question or to produce any book,

record, paper, or other data when required to do so, the Secretary or his authorized agent shall

report the failure or refusal to the Attorney General or the district solicitor, who shall thereupon

institute proceedings in the superior court of the county where the witness resides to compel

obedience to any summons of the Secretary or his authorized agent. Officers who serve

summonses or subpoenas, and witnesses attending, shall receive like compensation as officers

and witnesses in the superior courts, to be paid from the proper appropriation for the

administration of this Article.


In the event any retailer or wholesale merchant fails or refuses to permit the Secretary or his

authorized agent to examine his books, papers, accounts, records, documents or other data, the

Secretary may require the retailer or wholesale merchant to show cause before the superior court

of the county in which said taxpayer resides or has its principal place of business as to why the

books, records, papers, or documents should not be examined and the superior court shall have

jurisdiction to enter an order requiring the production of all necessary books, records, papers, or

documents and to punish for contempt any person who violates the order. (1957, c. 1340, s. 5;

1973, c. 476, s. 193; 1998-98, s. 52; 2013-414, s. 1(g).)


§ 105-164.32. Incorrect returns; estimate.

If a retailer, a wholesale merchant or a consumer fails to file a return and pay the tax due

under this Article or files a grossly incorrect or false or fraudulent return, the Secretary must

estimate the tax due and assess the retailer, wholesale merchant, or consumer based on the

estimate. (1957, c. 1340, s. 5; 1973, c. 476, s. 193; 2001-414, s. 21; 2009-451, s. 27A.3(u).)

Part 7. Failure to Make Returns; Overpayments.




§ 105-164.37. Bankruptcy, receivership, etc.

If any taxpayer subject to the provisions of this Article goes into bankruptcy, receivership or

turns over his stock of merchandise by voluntary transfer to creditors, the tax liability under this

Article shall constitute a prior lien upon such stock of merchandise and shall become subject to

levy under execution and it shall be the duty of the transferee in any such case to retain the

amount of the tax due from the first sales of such stock of merchandise and pay the same to the

Secretary. (1957, c. 1340, s. 5; 1973, c. 476, s. 193.)

§ 105-164.38. Tax is a lien.

(a) The tax imposed by this Article is a lien upon all personal property of any person who

is required by this Article to obtain a certificate of registration to engage in business and who

stops engaging in the business by transferring the business, transferring the stock of goods of the

business, or going out of business. A person who stops engaging in business must file the return

required by this Article within 30 days after transferring the business, transferring the stock of

goods of the business, or going out of business.

(b) Any person to whom the business or the stock of goods was transferred must

withhold from the consideration paid for the business or stock of goods an amount sufficient to

cover the taxes due until the person selling the business or stock of goods produces a statement

from the Secretary showing that the taxes have been paid or that no taxes are due. If the person

who buys a business or stock of goods fails to withhold an amount sufficient to cover the taxes

and the taxes remain unpaid after the 30-day period allowed, the buyer is personally liable for the

unpaid taxes to the extent of the greater of the following:


(1) The consideration paid by the buyer for the business or the stock of goods.

(2) The fair market value of the business or the stock of goods.

(c) Assessment. – The period of limitations for assessing liability against the buyer of a

business or the stock of goods of a business and for enforcing the lien against the property

expires one year after the end of the period of limitations for assessment against the person who

sold the business or the stock of goods. Except as otherwise provided in this section, the

assessment procedures in Article 9 of this Chapter apply to a person who buys a business or the

stock of goods of a business to the same extent as if the person had incurred the original tax

liability. (1957, c. 1340, s. 5; 1963, c. 1169, s. 3; 1973, c. 476, s. 193; 1991, c. 690, s. 6; 1991

(Reg. Sess., 1992), c. 949, s. 2; 2000-140, s. 67(c); 2007-491, s. 20.)

§ 105-164.39. Attachment.

In the event any retailer or wholesale merchant is delinquent in the payment of the tax herein

provided for, the Secretary may give notice of the amount of such delinquency by registered mail

to all persons having in their possession or under their control any credits or other personal

property belonging to such retailer or wholesale merchant or owing any debts to such taxpayer at

the time of the receipt by them of such notice and thereafter any person so notified shall neither

transfer nor make any other disposition of such credits, other personal property or debts until the

Secretary shall have consented to a transfer or disposition or until 30 days shall have elapsed

from and after the receipt of such notice. All persons so notified must within five days after

receipt of such notice advise the Secretary of any and all such credits, other personal property or

debts in their possession, under their control or owing by them as the case may be. The remedy

provided by this section shall be cumulative and optional and in addition to all other remedies

now provided by law for the collection of taxes due the State. (1957, c. 1340, s. 5; 1973, c. 476,

s. 193.)

§ 105-164.40. Jeopardy assessment.

If the Secretary is of the opinion that the collection of any tax or any amount of tax required

to be collected and paid to the State under this Article will be jeopardized by delay, he shall

make an assessment of the tax or amount of tax required to be collected and shall mail or issue a

notice of such assessment to the taxpayer together with a demand for immediate payment of the

tax or of the deficiency in tax declared to be in jeopardy including interest and penalties. In the

case of a tax for a current period, the Secretary may declare the taxable period of the taxpayer

immediately terminated and shall cause notice of such finding and declaration to be mailed or

issued to the taxpayer together with a demand for immediate payment of the tax based on the

period declared terminated and such tax shall be immediately due and payable, whether or not

the time otherwise allowed by law for filing a return and paying the tax has expired. Assessments

provided for in this section shall be immediately due and payable and proceedings for the

collection shall commence at once and if any such tax, penalty or interest is not paid upon

demand of the Secretary, he shall forthwith cause a levy to be made on the property of the

taxpayer or, in his discretion the Secretary may require the taxpayer to file such indemnity bond

as in his judgment may be sufficient to protect the interest of the State. (1957, c. 1340, s. 5; 1973,

c. 476, s. 193.)

§ 105-164.41: Repealed by Session Laws 2011-330, s. 38, effective June 27, 2011.



Part 7A. Uniform Sales and Use Tax Administration Act.

§ 105-164.42A. Short title.

This Part is the "Uniform Sales and Use Tax Administration Act" and may be cited by that

name. (2001-347, s. 1.3; 2005-276, s. 33.31.)

§ 105-164.42B. Definitions.


(1) Agreement. – Streamlined Agreement, as defined in G.S. 105-164.3.

(2) Certified automated system. – Software certified jointly by the states that are

signatories to the Agreement to calculate the tax imposed by each jurisdiction

on a transaction, determine the amount of tax to remit to the appropriate state,

and maintain a record of the transaction.

(3) Certified service provider. – An agent certified jointly by the states that are

signatories to the Agreement to perform all of the seller's sales tax functions.

(4) Member state. – A state that has entered into the Agreement.


(6) Sales tax. – The tax levied in G.S. 105-164.4.

(7) Seller. – A person making sales, leases, or rentals of personal property or

services.

(8) State. – The term "this State" means the State of North Carolina. Otherwise,

the term "state" means any state of the United States and the District of

Columbia.

(9) Use tax. – The tax levied in G.S. 105-164.6. (2001-347, s. 1.3; 2005-276, ss.

33.16, 33.31.)

§ 105-164.42C. Authority to enter Agreement.

The Secretary is authorized to enter into the Agreement with one or more states to simplify

and modernize sales and use tax administration in order to substantially reduce the burden of tax

compliance for all sellers and for all types of commerce. The Secretary may act jointly with other

member states to establish standards for certification of a certified service provider and a

certified automated system and to establish performance standards for multistate sellers.

The Secretary is authorized to represent this State before the other member states. The

Secretary may take any other actions reasonably required to implement this Part, including the

joint procurement with other member states of goods and services in furtherance of the

Agreement. (2001-347, s. 1.3; 2005-276, s. 33.31.)

§ 105-164.42D. Relationship to North Carolina law.

No provision of the Agreement authorized by this Part invalidates or amends any provision

of the law of this State. Adoption of the Agreement by this State does not amend or modify any

law of this State. Implementation of a condition of the Agreement in this State must be made

pursuant to an act of the General Assembly. (2001-347, s. 1.3; 2005-276, s. 33.31.)

§ 105-164.42E. Agreement requirements.


The Secretary may not enter into the Agreement unless the Agreement requires each state to

abide by the following requirements:

(1) Uniform state rate. – The Agreement must set restrictions to achieve more

uniform state rates through the following:

a. Limiting the number of state rates.

b. Limiting maximums on the amount of state tax that is due on a

transaction.

c. Limiting thresholds on the application of a state tax.

(2) Uniform standards. – The Agreement must establish uniform standards for all

of the following:

a. The sourcing of transactions to taxing jurisdictions.

b. The administration of exempt sales.

c. The allowances a seller can take for bad debts.

d. Sales and use tax returns and remittances.

(3) Uniform definitions. – The Agreement must require states to develop and

adopt uniform definitions of sales and use tax terms. The definitions must

enable a state to preserve its ability to make policy choices not inconsistent

with the uniform definitions.

(4) Central registration. – The Agreement must provide a central, electronic

registration system that allows a seller to register to collect and remit sales and

use taxes for all signatory states.

(5) No nexus attribution. – The Agreement must provide that registration with the

central registration system and the collection of sales and use taxes in the

signatory states will not be used as a factor in determining whether the seller

has nexus with a state for any tax.

(6) Local sales and use taxes. – The Agreement must provide for reduction of the

burdens of complying with local sales and use taxes through one or more of

the following:

a. Restricting variances between the state and local tax bases.

b. Requiring states to administer any sales and use taxes levied by local

jurisdictions within the state so that sellers collecting and remitting

these taxes will not have to register or file returns with, remit funds to,

or be subject to independent audits from local taxing jurisdictions.

c. Restricting the frequency of changes in the local sales and use tax rates

and setting effective dates for the application of local jurisdictional

boundary changes to local sales and use taxes.

d. Providing notice of changes in local sales and use tax rates and of

changes in the boundaries of local taxing jurisdictions.

(7) Monetary allowances. – The Agreement must outline any monetary

allowances that are to be provided by the states to sellers or certified service

providers.

(8) State compliance. – The Agreement must require each state to certify

compliance with the terms of the Agreement before becoming a member and

to maintain compliance, under the laws of the member state, with all

provisions of the Agreement while a member.


(9) Consumer privacy. – The Agreement must require each state to adopt a

uniform policy for certified service providers that protects the privacy of

consumers and maintains the confidentiality of tax information. (2001-347, s.

1.3; 2005-276, s. 33.31.)

§ 105-164.42F. Cooperating sovereigns.

The Agreement authorized by this Part is an accord among individual cooperating sovereigns

in furtherance of their governmental functions. The Agreement provides a mechanism among the

member states to establish and maintain a cooperative, simplified system for the application and

administration of sales and use taxes under the laws of each member state. (2001-347, s. 1.3;

2005-276, s. 33.31.)

§ 105-164.42G. Effect of Agreement.

Entry of this State into the Agreement does not create a cause of action or a defense to an

action. No person may challenge any action or inaction by a department, agency, or other

instrumentality of this State, or a political subdivision of this State, on the ground that the action

or inaction is inconsistent with the Agreement. No law of this State, or its application, may be

declared invalid on the ground that the provision or application is inconsistent with the

Agreement. (2001-347, s. 1.3; 2005-276, s. 33.31.)

§ 105-164.42H. Certification of certified automated system and effect of certification.

(a) Certification. – The Secretary may certify a software program as a certified

automated system if the Secretary determines that the program correctly determines all of the

following and that the software can generate reports and returns required by the Secretary:

(1) The applicable combined State and local sales and use tax rate for a sale,

based on the sourcing principles in G.S. 105-164.4B.

(2) Whether or not an item is exempt from tax, based on a uniform product code

or another method.


(4) The amount of tax to be remitted for each taxpayer for a reporting period.

(5) Any other issue necessary for the application or calculation of sales and use

tax due.

(b) Liability. – A seller may choose to use a certified automated system in performing its

sales tax administration functions. A seller that uses a certified automated system is liable for

sales and use taxes due on transactions it processes using the certified automated system except

for underpayments of tax attributable to errors in the functioning of the system. A person that

provides a certified automated system is responsible for the proper functioning of that system

and is liable for underpayments of tax attributable to errors in the functioning of the system.

(2000-120, s. 2; 2001-347, ss. 1.1, 1.3; 2005-276, s. 33.31; 2006-33, s. 12.)

§ 105-164.42I. Contract with certified service provider and effect of contract.

(a) Certification. – The Secretary may certify an entity as a certified service provider if

the entity meets all of the following requirements:

(1) The entity uses a certified automated system.

(2) The entity has agreed to update its program upon notification by the Secretary.


(3) The entity integrates its certified automated system with the system of a seller

for whom the entity collects tax so that the tax due on a sale is determined at

the time of the sale.

(4) The entity remits the taxes it collects at the time and in the manner specified

by the Secretary.

(5) The entity agrees to file sales and use tax returns on behalf of the sellers for

whom it collects tax.

(6) The entity enters into a contract with the Secretary and agrees to comply with

all the conditions of the contract.

(b) Contract. – The Secretary may contract or authorize in writing the Streamlined Sales

Tax Governing Board to contract on behalf of the Secretary with a certified service provider for

the collection and remittance of sales and use taxes. A certified service provider must file with

the Secretary or the Streamlined Sales Tax Governing Board a bond or an irrevocable letter of

credit in the amount set by the Secretary. A bond or irrevocable letter of credit must be

conditioned upon compliance with the contract, be payable to the State or the Streamlined Sales

Tax Governing Board, and be in the form required by the Secretary. The amount a certified

service provider charges under the contract is a cost of collecting the tax and is payable from the

amount collected.

(c) Liability. – A seller may contract with a certified service provider to collect and remit

sales and use taxes payable to the State on sales made by the seller. A certified service provider

with whom a seller contracts is the agent of the seller. As the seller's agent, the certified service

provider, rather than the seller, is liable for sales and use taxes due this State on all sales

transactions the certified service provider processes for the seller unless the seller misrepresents

the type of products it sells or commits fraud. A seller that misrepresents the type of products it

sells or commits fraud is liable for taxes not collected as a result of the misrepresentation or

fraud.

(d) Audit and Review. – In the absence of misrepresentation or fraud, a seller that

contracts with a certified service provider is not subject to audit on the transactions processed by

the certified service provider. A seller is subject to audit for transactions not processed by the

certified service provider. The State may perform a system check of a seller and review a seller's

procedures to determine if the certified service provider's system is functioning properly and the

extent to which the seller's transactions are being processed by the certified service provider. A

certified service provider is subject to audit. (2000-120, s. 2; 2001-347, ss. 1.1, 1.3; 2005-276, s.

33.31; 2013-414, s. 44.)

§ 105-164.42J. Performance standard for multistate seller.

The Secretary may establish a performance standard for a seller that is engaged in business in

this State and at least 10 other states and has developed a proprietary system to determine the

amount of sales and use taxes due on transactions. A seller that enters into an agreement with the

Secretary that establishes a performance standard for that system is liable for the failure of the

system to meet the performance standard. (2001-347, s. 1.3; 2005-276, s. 33.31.)

§ 105-164.42K. Registration and effect of registration.

Registration under the Agreement satisfies the registration requirements under this Article. A

seller who registers under the Agreement within 12 months after the State becomes a member of


the Agreement and who meets the following conditions is not subject to assessment for sales tax

for any period before the effective date of the seller's registration:

(1) The seller was not registered with the State during the 12-month period before

the effective date of this State's participation in the Agreement.

(2) When the seller registered, the seller had not received a letter from the

Department notifying the seller of an audit.

(3) The seller continues to be registered under the Agreement and to remit tax to

the State for at least 36 months. (2005-276, s. 33.17.)

§ 105-164.42L. Liability relief for erroneous information or insufficient notice by

Department.

(a) The Secretary may develop databases that provide information on the boundaries of

taxing jurisdictions and the tax rates applicable to those taxing jurisdictions. A person who relies

on the information provided in these databases is not liable for underpayments of tax attributable

to erroneous information provided by the Secretary in those databases.

(b) The Secretary may develop a taxability matrix that provides information on the

taxability of certain items. A person who relies on the information provided in the taxability

matrix is not liable for underpayments of tax attributable to erroneous information provided by

the Secretary in the taxability matrix.

(c) A retailer is not liable for an underpayment of tax attributable to a rate change when

the State fails to provide for at least 30 days between the enactment of the rate change and the

effective date of the rate change if the conditions of this subsection are satisfied. However, if the

State establishes the retailer fraudulently failed to collect tax at the new rate or solicited

customers based on the immediately preceding effective rate, this liability relief does not apply.

Both of the following conditions must be satisfied for liability relief:

(1) The retailer collected tax at the immediately preceding rate.

(2) The retailer's failure to collect at the newly effective rate does not extend

beyond 30 days after the date of enactment of the new rate or the effective

date applicable under G.S. 105-164.15A. (2005-276, s. 33.18; 2007-244, s. 5;

2013-414, s. 15.)

Part 8. Administration and Enforcement.

§ 105-164.43: Repealed by Session Laws 2007-491, s. 2, effective January 1, 2008.

§ 105-164.43A. (Recodified effective August 8, 2001 – See note) Certification of tax

collector software and tax collector.

(a) Recodified as § 105-164.42H(a) by Session Laws 2001-347, s. 1.1, effective August

8,2001. See note.

(b) Recodified as § 105-164.42I(a) by Session Laws 2001-347, s. 1.1, effective August 8,

2001. See note. (2000-120, s. 2; 2001-347, s. 1.1.)

§ 105-164.43B. (Recodified effective August 8, 2001 – See note) Contract with Certified

Sales Tax Collector.

Recodified as § 105-164.42I(b) by Session Laws 2001-347, s. 1.1, effective August 8, 2001.

See note. (2000-120, s. 2; 2001-347, s. 1.1.)


§ 105-164.43C: Repealed by Session Laws 2001-347, s. 1.2, effective August 8, 2001. See note.

§ 105-164.43D. Applicable due date when due date falls on a weekend, holiday, or when

the Federal Reserve Bank is closed.

(a) Weekends and Holidays. – When the last day for doing an act required or permitted

by this Article or Subchapter VIII of this Chapter falls on a Saturday, Sunday, or holiday, the act

is considered to be done within the prescribed time limit if it is done on the next business day.

(b) Federal Reserve Bank Closure. – If the Federal Reserve Bank is closed on a due date

that prohibits a person from making a payment by ACH debit or credit as required by this Article

or Subchapter VIII of this Chapter, the payment is timely if made on the next day the Federal

Reserve Bank is open. (2014-3, s. 14.10.)

§ 105-164.44. Penalty and remedies of Article 9 applicable.

All provisions not inconsistent with this Article in Article 9, entitled "General Administration

– Penalties and Remedies" of Subchapter I of Chapter 105 of the General Statutes, including but

not limited to, administration, auditing, making returns, promulgation of rules and regulations by

the Secretary, additional taxes, assessment procedure, imposition and collection of taxes and the

lien thereof, assessments, refunds and penalties are hereby made a part of this Article and shall

be applicable thereto. (1957, c. 1340, s. 5; 1973, c. 476, s. 193.)

§ 105-164.44A: Repealed by Session Laws 1991, c. 45, s. 18.

§ 105-164.44B: Repealed by Session Laws 2011-145, s. 13.27(a), effective July 1, 2011.

§ 105-164.44C: Repealed by Session Laws 2001-424, s. 34.15(a)(1), as amended by Session

Laws 2002-126, s. 30A.1, effective July 1, 2002.

§ 105-164.44D: Repealed by Session Laws 2015-241, s. 2.2(b), effective July 1, 2015.

§ 105-164.44E. (Repealed effective July 1, 2020) Transfer to the Dry-Cleaning Solvent

Cleanup Fund.

(a) Transfer. – At the end of each quarter, the Secretary must transfer to the

Dry-Cleaning Solvent Cleanup Fund established under G.S. 143-215.104C an amount equal to

fifteen percent (15%) of the net State sales and use taxes collected under G.S. 105-164.4(a)(4)

during the previous fiscal year, as determined by the Secretary based on available data.

(b) Sunset. – This section is repealed effective July 1, 2020. (2000-19, s. 1.1; 2009-483,

ss. 6, 8.)

§ 105-164.44F. Distribution of part of telecommunications taxes to cities.

(a) Amount. – The Secretary must distribute part of the taxes imposed by G.S.

105-164.4(a)(4c) on telecommunications service and ancillary service. The Secretary must make

the distribution within 75 days after the end of each calendar quarter. The amount the Secretary

must distribute is the following percentages of the net proceeds of the taxes collected during the

quarter:

(1) Eighteen and seventy one hundredths percent (18.70%) minus two million six

hundred twenty thousand nine hundred forty-eight dollars ($2,620,948), must


be distributed to cities in accordance with this section. The deduction is

one-fourth of the annual amount by which the distribution to cities of the

gross receipts franchise tax on telephone companies, imposed by former G.S.

105-20, was required to be reduced beginning in fiscal year 1995-96 as a

result of the "freeze deduction."

(2) Seven and seven tenths percent (7.7%) must be distributed to counties and

cities as provided in G.S. 105-164.44I.

(b) Share of Cities Incorporated on or After January 1, 2001. – The share of a city

incorporated on or after January 1, 2001, is its per capita share of the amount to be distributed to

all cities incorporated on or after this date. This amount is the proportion of the total to be

distributed under this section that is the same as the proportion of the population of cities

incorporated on or after January 1, 2001, compared to the population of all cities. In making the

distribution under this subsection, the Secretary must use the most recent annual population

estimates certified to the Secretary by the State Budget Officer.

(c) Share of Cities Incorporated Before January 1, 2001. – The share of a city

incorporated before January 1, 2001, is its proportionate share of the amount to be distributed to

all cities incorporated before this date. A city's proportionate share for a quarter is based on the

amount of telephone gross receipts franchise taxes attributed to the city under G.S. 105-116.1 for

the same quarter that was the last quarter in which taxes were imposed on telephone companies

under repealed G.S. 105-120. The amount to be distributed to all cities incorporated before

January 1, 2001, is the amount determined under subsection (a) of this section, minus the amount

distributed under subsection (b) of this section.

The following changes apply when a city incorporated before January 1, 2001, alters its

corporate structure. When a change described in subdivision (2) or (3) occurs, the resulting cities

are considered to be cities incorporated before January 1, 2001, and the distribution method set

out in this subsection rather than the method set out in subsection (b) of this section applies:

(1) If a city dissolves and is no longer incorporated, the proportional shares of the

remaining cities incorporated before January 1, 2001, must be recalculated to

adjust for the dissolution of that city.

(2) If two or more cities merge or otherwise consolidate, their proportional shares

are combined.

(3) If a city divides into two or more cities, the proportional share of the city that

divides is allocated among the new cities on a per capita basis.

(d) Share of Cities Served by a Telephone Membership Corporation. – The share of a city

served by a telephone membership corporation, as described in Chapter 117 of the General

Statutes, is computed as if the city was incorporated on or after January 1, 2001, under

subsection (b) of this section. If a city is served by a telephone membership corporation and

another provider, then its per capita share under this subsection applies only to the population of

the area served by the telephone membership corporation.

(e) Ineligible Cities. – An ineligible city is disregarded for all purposes under this

section. A city incorporated on or after January 1, 2000, is not eligible for a distribution under

this section unless it meets both of the following requirements:

(1) It is eligible to receive funds under G.S. 136-41.2.

(2) A majority of the mileage of its streets is open to the public.

(f) Nature. – The General Assembly finds that the revenue distributed under this section

is local revenue, not a State expenditure, for the purpose of Section 5(3) of Article III of the


North Carolina Constitution. Therefore, the Governor may not reduce or withhold the

distribution. (2001-424, s. 34.25(b); 2001-430, s. 10; 2001-487, s. 67(d); 2002-120, s. 4;

2004-203, s. 5(g); 2005-276, s. 33.19; 2005-435, s. 34(c); 2006-33, s. 8; 2006-66, ss. 24.1(d), (e),

(f), (g); 2006-151, s. 7; 2007-145, s. 9(a); 2007-323, ss. 31.2(a), (b); 2009-451, s. 27A.2(c).)

§ 105-164.44G. (Repealed for sales made on or after January 1, 2014) Distribution of part

of tax on modular homes.

The Secretary must distribute to counties twenty percent (20%) of the taxes collected under

G.S. 105-164.4(a)(8) on modular homes. The Secretary must make the distribution on a monthly

basis in accordance with the distribution formula in G.S. 105-486. (2003-400, s. 16; 2009-445, s.

15(a); 2013-316, s. 3.1(b).)

§ 105-164.44H. Transfer to State Public School Fund.

Each fiscal year, the Secretary of Revenue shall transfer at the end of each quarter from the

State sales and use tax net collections received by the Department of Revenue under Article 5 of

Chapter 105 of the General Statutes to the State Treasurer for the State Public School Fund,

one-fourth of the amount transferred the preceding fiscal year plus or minus the percentage of

that amount by which the total collection of State sales and use taxes increased or decreased

during the preceding fiscal year. (2005-276, s. 7.51(b).)

§ 105-164.44I. Distribution of part of sales tax on video programming service and

telecommunications service to counties and cities.

(a) Distribution. – The Secretary must distribute to the counties and cities part of the

taxes imposed by G.S. 105-164.4(a)(4c) on telecommunications service and G.S. 105-164.4(a)(6)

on video programming service. The Secretary must make the distribution within 75 days after the

end of each calendar quarter. The amount the Secretary must distribute is the sum of the revenue

listed in this subsection. From this amount, the Secretary must first make the distribution

required by subsection (b) of this section and then distribute the remainder in accordance with

subsections (c) and (d) of this section. The revenue to be distributed under this section consists of

the following:

(1) The amount specified in G.S. 105-164.44F(a)(2).

(2) Twenty three and six tenths percent (23.6%) of the net proceeds of the taxes

collected during the quarter on video programming, other than on

direct-to-home satellite service.

(3) Thirty-seven and one tenths percent (37.1%) of the net proceeds of the taxes

collected during the quarter on direct-to-home satellite service.

(b) Supplemental PEG Channel Support. – G.S. 105-164.44J sets out the requirements

for receipt by a county or city of supplemental PEG channel support funds distributed under this

subsection. The Secretary must include the applicable amount of supplemental PEG channel

support in each quarterly distribution to a county or city. The amount to include is one-fourth of

the share of each qualifying PEG channel certified by the city or county under G.S. 105-164.44J.

The share of each certified PEG channel is the sum of four million dollars ($4,000,000) and the

amount of any funds returned to the Secretary in the prior fiscal year under G.S. 105-164.44J(d)

divided by the number of PEG channels certified under G.S. 105-164.44J. A county or city may

not receive PEG channel support under this subsection for more than three qualifying PEG

channels.


For purposes of this subsection, the term "qualifying PEG channel" has the same meaning as

in G.S. 105-164.44J.

(c) 2006-2007 Fiscal Year Distribution. – The share of a county or city is its

proportionate share of the amount to be distributed to all counties and cities under this

subsection. The proportionate share of a county or city is the base amount for the county or city

compared to the base amount for all other counties and cities. The base amount of a county or

city that did not impose a cable franchise tax under G.S. 153A-154 or G.S. 160A-214 before July

1, 2006, is two dollars ($2.00) times the most recent annual population estimate for that county

or city. The base amount of a county or city that imposed a cable franchise tax under either G.S.

153A-154 or G.S. 160A-214 before July 1, 2006, is the amount of cable franchise tax and

subscriber fee revenue the county or city certifies to the Secretary that it imposed during the first

six months of the 2006-2007 fiscal year. A county or city must make this certification by March

15, 2007. The certification must specify the amount of revenue that is derived from the cable

franchise tax and the amount that is derived from the subscriber fee.

(c1) Revised Certification. – If a county or city determines that the amount of cable

franchise tax it imposed during the first six months of the 2006-2007 fiscal year differs from the

amount certified to the Secretary under subsection (c) of this section, the county or city may

submit a new certification to the Secretary revising the amount. For distributions for quarters

beginning on or after October 1, 2007, the Secretary must determine the proportionate share of a

county or city based upon certifications submitted on or before October 1, 2007. For distributions

for quarters beginning on or after April 1, 2008, the Secretary must determine the proportionate

share of a county or city based upon certifications submitted on or before April 1, 2008.

Certifications submitted after April 1, 2008, may not be used to adjust a county's or city's base

amount under subsection (c) of this section.

(d) Subsequent Distributions. – For subsequent fiscal years, the Secretary must multiply

the amount of a county's or city's share under this section for the preceding fiscal year by the

percentage change in its population for that fiscal year and add the result to the county's or city's

share for the preceding fiscal year to obtain the county's or city's adjusted amount. Each county's

or city's proportionate share for that year is its adjusted amount compared to the sum of the

adjusted amounts for all counties and cities.

(e) Use of Proceeds. – A county or city that imposed subscriber fees during the first six

months of the 2006-2007 fiscal year must use a portion of the funds distributed to it each fiscal

year under subsections (c) and (d) of this section for the operation and support of PEG channels.

The amount of funds that must be used for PEG channel operation and support in fiscal year

2006-2007 is two times the amount of subscriber fee revenue the county or city certified to the

Secretary that it imposed during the first six months of the 2006-2007 fiscal year. The amount of

funds that must be used for PEG channel operation and support in subsequent fiscal years is the

same proportionate amount of the funds that were distributed under subsections (c) and (d) of

this section and used for this purpose in fiscal year 2006-2007.

A county or city that used part of its franchise tax revenue in fiscal year 2005-2006 for the

operation and support of PEG channels or a publicly owned and operated television station must

use the funds distributed to it under subsections (c) and (d) of this section to continue the same

level of support for the PEG channels and public stations. The remainder of the distribution may

be used for any public purpose.

(f) Late Information. – A county or city that does not submit information that the

Secretary needs to make a distribution by the date the information is due is excluded from the


distribution. If the county or city later submits the required information, the Secretary must

include the county or city in the distribution for the quarter that begins after the date the

information is received.

(g) Population Determination. – In making population determinations under this section,

the Secretary must use the most recent annual population estimates certified to the Secretary by

the State Budget Officer. For purposes of the distributions made under this section, the

population of a county is the population of its unincorporated areas plus the population of an

ineligible city in the county, as determined under this section.

(h) City Changes. – The following changes apply when a city alters its corporate

structure or incorporates:

(1) If a city dissolves and is no longer incorporated, the proportional shares of the

remaining counties and cities must be recalculated to adjust for the dissolution

of that city.

(2) If two or more cities merge or otherwise consolidate, their proportional shares

are combined.

(3) If a city divides into two or more cities, the proportional share of the city that

divides is allocated among the new cities on a per capita basis.

(4) If a city incorporates after January 1, 2007, and the incorporation is not

addressed by subdivisions (2) or (3) of this subsection, the share of the county

in which the new city is located is allocated between the county and the new

city on a per capita basis.

(i) Ineligible Cities. – An ineligible city is disregarded for all purposes under this

section. A city incorporated on or after January 1, 2000, is not eligible for a distribution under

this section unless it meets both of the following requirements:

(1) It is eligible to receive funds under G.S. 136-41.2.

(2) A majority of the mileage of its streets is open to the public.

(j) Nature. – The General Assembly finds that the revenue distributed under this section


North Carolina Constitution. Therefore, the Governor may not reduce or withhold the

distribution. (2006-151, s. 8; 2006-66, ss. 24.1(h), (i); 2007-145, s. 9(a); 2007-323, ss. 31.2(a),

(b); 2007-527, s. 28; 2008-148, ss. 1, 2; 2009-451, s. 27A.2(d); 2010-158, s. 11(b); 2013-414, s.

45.)

§ 105-164.44J. Supplemental PEG channel support.


(1) Existing agreement. – Defined in G.S. 66-350.

(2) PEG channel. – Defined in G.S. 66-350.

(3) PEG channel operator. – An entity that does one or more of the following:

a. Produces programming for delivery on a PEG channel.

b. Provides facilities for the production of programming or playback of

programming for delivery on a PEG channel.

(4) Qualifying PEG channel. – A PEG channel that operates for at least 90 days

during a fiscal year and that meets all of the following programming

requirements:

a. It delivers at least eight hours of scheduled programming a day.


b. It delivers at least six hours and 45 minutes of scheduled,

non-character-generated programming a day.

c. Its programming content does not repeat more than fifteen percent

(15%) of the programming content on any other PEG channel provided

to the same county or city.

(5) Supplemental PEG channel support funds. – The amount distributed to a

county or city under G.S. 105-164.44I(b).

(b) Certification. – A county or city must certify to the Secretary by July 15 of each year

all of the qualifying PEG channels provided for its use during the preceding fiscal year by a

cable service provider under either G.S. 66-357 or an existing agreement. A county or city may

not certify more than three qualifying PEG channels. The certification must include all of the

following:

(1) An identification of each channel as a public, an education, or a government

channel.

(2) The name and signature of the PEG channel operator for each channel. If a

qualifying PEG channel has more than one PEG channel operator, the county

or city must include the name of each operator of the PEG channel. A PEG

channel operator may be included on the certification of only one county or

city for each type of PEG channel that it operates.


(c) Use of Funds. – A county or city must use the supplemental PEG channel support

funds distributed to it for the operation and support of each of the qualifying PEG channels it

certifies by allocating the amount it receives equally among each of the qualifying PEG

channels. A county or city must distribute the supplemental PEG channel support funds to the

PEG channel operator of the qualifying PEG channel within 30 days of its receipt of the

supplemental PEG channel support funds from the Department, or as specified in an interlocal

agreement. If a qualifying PEG channel has more than one PEG channel operator, the county or

city must distribute the amount allocated for that PEG channel equally to each PEG channel

operator, or as specified in an interlocal agreement.

(d) Errors in Certification. – If a county or city determines that it certified a PEG channel

in error, the county or city must submit a revised certification to the Secretary, and the county or

city must return all supplemental PEG channel support funds distributed to it as a result of the

error. The Secretary must add the funds returned to the total amount of supplemental PEG

channel support funds to be allocated in the following fiscal year. (2008-148, s. 3; 2010-158, s.

11(c).)

§ 105-164.44K. (Effective for quarters beginning on or after July 1, 2014) Distribution of

part of tax on electricity to cities.

(a) Distribution. – The Secretary must distribute to cities forty-four percent (44%) of the

net proceeds of the tax collected under G.S. 105-164.4 on electricity, less the cost to the

Department of administering the distribution. Each city's share of the amount to be distributed is

its franchise tax share calculated under subsection (b) of this section plus its ad valorem share

calculated under subsection (c) of this section. If the net proceeds of the tax allocated under this

section are not sufficient to distribute the franchise tax share of each city under subsection (b) of

this section, the proceeds shall be distributed to each city on a pro rata basis. The Secretary must

make the distribution within 75 days after the end of each quarter.


(b) Franchise Tax Share. – The quarterly franchise tax share of a city is the total amount

of electricity gross receipts franchise tax distributed to the city under repealed G.S. 105-116.1 or

repealed provisions of G.S. 159B-27 for the same related quarter that was the last quarter in

which taxes were imposed on electric power companies under repealed G.S. 105-116 or repealed

provisions of G.S. 159B-27. The quarterly franchise tax share of a city includes adjustments

made for the hold-harmless amounts under repealed G.S. 105-116. If the franchise tax share of a

city, including the hold-harmless adjustments, is less than zero, then the amount is zero. The

determination made by the Department with respect to a city's franchise tax share is final and is

not subject to administrative or judicial review.

The franchise tax share of a city that has dissolved, merged with another city, or divided into

two or more cities since it received a distribution under repealed G.S. 105-116.1 or repealed

provisions of G.S. 159B-27 is adjusted as follows:

(1) If a city dissolves and is no longer incorporated, the franchise tax share of the

city is added to the amount distributed under subsection (c) of this section.

(2) If two or more cities merge or otherwise consolidate, their franchise tax shares

are combined.

(3) If a city divides into two or more cities, the franchise tax share of the city that

divides is allocated among the new cities in proportion to the total amount of

ad valorem taxes levied by each on property having a tax situs in the city.

(c) Ad Valorem Share. – The ad valorem share of a city is its proportionate share of the

amount that remains for distribution after determining each city's franchise tax share under

subsection (b) of this section. The prohibitions in G.S. 105-472(d) on the receipt of funds by a

city apply to the distribution under this subsection.

A city's proportionate share is the amount of ad valorem taxes it levies on property having a

tax situs in the city compared to the ad valorem taxes levied by all cities on property having a tax

situs in the cities. The ad valorem method set out in G.S. 105-472(b)(2) applies in determining

the share of a city under this subsection based on ad valorem taxes, except that the amount of ad

valorem taxes levied by a city does not include ad valorem taxes levied on behalf of a taxing

district and collected by the city.

(d) Nature. – The General Assembly finds that the revenue distributed under this section


North Carolina Constitution. The Governor may not reduce or withhold the distribution.

(2013-316, s. 4.3(a); 2013-363, s. 11.2.)

§ 105-164.44L. (Effective for quarters beginning on or after July 1, 2014) Distribution of

part of tax on piped natural gas to cities.

(a) (Effective for quarters beginning before July 1, 2015) Distribution. – The

Secretary must distribute to cities twenty percent (20%) of the net proceeds of the tax collected

under G.S. 105-164.4 on piped natural gas, less the cost to the Department of administering the

distribution. Each city's share of the amount to be distributed is its excise tax share calculated

under subsection (b) of this section plus its ad valorem share calculated under subsection (c) of

this section. If the net proceeds of the tax allocated under this section are not sufficient to

distribute the excise tax share of each city under subsection (b) of this section, the proceeds shall

be distributed to each city on a pro rata basis. The Secretary must make the distribution within 75

days after the end of each quarter.


(a) (Effective for quarters beginning on or after July 1, 2015) Distribution. – The

Secretary must distribute to cities twenty percent (20%) of the net proceeds of the tax collected

under G.S. 105-164.4 on piped natural gas, less the cost to the Department of administering the

distribution. Each city's share of the amount to be distributed is its excise tax share calculated

under subsection (b) of this section plus its ad valorem share calculated under subsection (c) of

this section. A gas city will also receive an amount calculated under subsection (b1) of this

section as part of its excise tax share. If the net proceeds of the tax allocated under this section

are not sufficient to distribute the excise tax share of each city under subsection (b) of this

section and the gas city share under subsection (b1) of this section, the proceeds shall be

distributed to each city on a pro rata basis. The Secretary must make the distribution within 75

days after the end of each quarter.

(b) Excise Tax Share. – The quarterly excise tax share of a city is the amount of piped

natural gas excise tax distributed to the city under repealed G.S. 105-187.44 for the same related

quarter that was the last quarter in which taxes were imposed on piped natural gas under repealed

Article 5E of this Chapter. The determination made by the Department with respect to a city's

excise tax share is final and is not subject to administrative or judicial review.

The excise tax share of a city that has dissolved, merged with another city, or divided into

two or more cities since it received a distribution under repealed G.S. 105-187.44 is adjusted as

follows:

(1) If a city dissolves and is no longer incorporated, the excise tax share of the

city is added to the amount distributed under subsection (c) of this section.

(2) If two or more cities merge or otherwise consolidate, their excise tax shares

are combined.

(3) If a city divides into two or more cities, the excise tax share of the city that

divides is allocated among the new cities in proportion to the total amount of

ad valorem taxes levied by each on property having a tax situs in the city.

(b1) (Effective for quarters beginning on or after July 1, 2015) Gas Cities. – In addition

to the excise tax share calculated under subsection (b) of this section, a gas city shall receive as

part of its excise tax share a distribution calculated under this subsection. The Secretary must

determine the amount the gas city would have received under repealed G.S. 105-187.44 for the

last year in which taxes were imposed under repealed Article 5E of this Chapter if piped natural

gas consumed by the city or delivered by the city to a customer had not been exempt from tax

under repealed G.S. 105-187.41(c)(1) and G.S. 105-187.41(c)(2), excluding any amount received

under subsection (b) of this section, and divide that amount by four to calculate the quarterly

distribution amount for a gas city under this subsection. A gas city must report the information

required by the Secretary to make the distribution under this section in the form, manner, and

time required by the Secretary. The determination made by the Department with respect to a gas

city's share under this subsection is final and is not subject to administrative or judicial review.

For purposes of this section, the term "gas city" is a city in this State that operated a piped natural

gas distribution system as of July 1, 1998. These cities are Bessemer City, Greenville, Kings

Mountain, Lexington, Monroe, Rocky Mount, Shelby, and Wilson.

(c) Ad Valorem Share. – The ad valorem share of a city is its proportionate share of the

amount that remains for distribution after determining each city's excise tax share under

subsection (b) of this section. Only cities that receive an excise tax share under subsection (b) of

this section for any quarter of the year are eligible to receive an ad valorem share. The


prohibitions in G.S. 105-472(d) on the receipt of funds by a city apply to the distribution under

this subsection.

A city's proportionate share is the amount of ad valorem taxes it levies on property having a

tax situs in the city compared to the ad valorem taxes levied by all cities on property having a tax

situs in the cities. The ad valorem method set out in G.S. 105-472(b)(2) applies in determining

the share of a city under this section based on ad valorem taxes, except that the amount of ad

valorem taxes levied by a city does not include ad valorem taxes levied on behalf of a taxing

district and collected by the city.

(d) Nature. – The General Assembly finds that the revenue distributed under this section


North Carolina Constitution. The Governor may not reduce or withhold the distribution.

(2013-316, s. 4.3(a); 2014-3, s. 14.13(e); 2014-39, ss. 1(b)-(d).)

§ 105-164.44M. Transfer to Division of Aviation.

The net proceeds of the tax collected on aviation gasoline and jet fuel under G.S. 105-164.4

must be transferred within 75 days after the end of each fiscal year to the Highway Fund. This

amount is annually appropriated from the Highway Fund to the Division of Aviation of the

Department of Transportation for prioritized capital improvements to public airports and

time-sensitive aviation capital improvement projects for economic development purposes.

(2015-259, s. 4.1(d).)

DIVISION IX. LOCAL OPTION SALES AND USE TAXES.


§§ 105-165 through 105-176. Repealed by Session Laws 1957, c. 1340, s. 5.

§§ 105-177 through 105-178. Repealed by Session Laws 1951, c. 643, s.5.





§§ 105-183 through 105-187: Repealed by Session Laws 1957, c. 1340, s. 5.

Article 5A.

North Carolina Highway Use Tax.


The following definitions and the definitions in G.S. 105-164.3 apply to this Article:

(1) Commissioner. – The Commissioner of Motor Vehicles.

(2) Division. – The Division of Motor Vehicles, Department of Transportation.


(3) Long-term lease or rental. – A lease or rental made under a written agreement

to lease or rent property to the same person for a period of at least 365

continuous days.

(4) Recreational vehicle. – Defined in G.S. 20-4.01.

(5) Rescue squad. – An organization that provides rescue services, emergency

medical services, or both.

(6) Retailer. – A retailer as defined in G.S. 105-164.3 who is engaged in the

business of selling, leasing, or renting motor vehicles.

(7) Short-term lease or rental. – A lease or rental that is not a long-term lease or

rental. (1989, c. 692, s. 4.1; 1991, c. 79, s. 4; 2000-173, s. 10(a); 2001-424, s.

34.24(e); 2001-497, s. 2(b); 2002-72, s. 19(a).)

§ 105-187.2. Highway use tax imposed.

A tax is imposed on the privilege of using the highways of this State. This tax is in addition

to all other taxes and fees imposed. (1989, c. 692, s. 4.1.)

§ 105-187.3. Rate of tax.

(a) (Effective until March 1, 2016) Tax Base. – The tax imposed by this Article is

applied to the sum of the retail value of a motor vehicle for which a certificate of title is issued

and any fee regulated by G.S. 20-101.1. The tax does not apply to the sales price of a service

contract. The sales price of a service contract is subject to the sales tax imposed under Article 5

of this Chapter.

(a) (Effective March 1, 2016) Tax Base. – The tax imposed by this Article is applied to

the sum of the retail value of a motor vehicle for which a certificate of title is issued and any fee

regulated by G.S. 20-101.1. The tax does not apply to the sales price of a service contract,

provided the charge is separately stated on the bill of sale or other similar document given to the

purchaser at the time of the sale.

(a1) Tax Rate. – The tax rate is three percent (3%). The maximum tax is two thousand

dollars ($2,000) for each certificate of title issued for a Class A or Class B motor vehicle that is a

commercial motor vehicle, as defined in G.S. 20-4.01, and for each certificate of title issued for a

recreational vehicle. The tax is payable as provided in G.S. 105-187.4.

(b) Retail Value. – The retail value of a motor vehicle for which a certificate of title is

issued because of a sale of the motor vehicle by a retailer is the sales price of the motor vehicle,

including all accessories attached to the vehicle when it is delivered to the purchaser, less the

amount of any allowance given by the retailer for a motor vehicle taken in trade as a full or

partial payment for the purchased motor vehicle.

The retail value of a motor vehicle for which a certificate of title is issued because of a sale

of the motor vehicle by a seller who is not a retailer is the market value of the vehicle, less the

amount of any allowance given by the seller for a motor vehicle taken in trade as a full or partial

payment for the purchased motor vehicle. A transaction in which two parties exchange motor

vehicles is considered a sale regardless of whether either party gives additional consideration as

part of the transaction.

The retail value of a motor vehicle for which a certificate of title is issued because of a reason

other than the sale of the motor vehicle is the market value of the vehicle. The market value of a

vehicle is presumed to be the value of the vehicle set in a schedule of values adopted by the

Commissioner.


The retail value of a vehicle for which a certificate of title is issued because of a transfer by a

State agency that assists the United States Department of Defense with purchasing, transferring,

or titling a vehicle to another State agency, a unit of local government, a volunteer fire

department, or a volunteer rescue squad is the sales price paid by the State agency, unit of local

government, volunteer fire department, or volunteer rescue squad.

(c) Schedules. – In adopting a schedule of values for motor vehicles, the Commissioner

shall adopt a schedule whose values do not exceed the wholesale values of motor vehicles as

published in a recognized automotive reference manual. (1989, c. 692, ss. 4.1, 4.2; c. 770, s.

74.13; 1993, c. 467, s. 3; 1995, c. 349, s. 1; c. 390, s. 30; 2001-424, s. 34.24(a); 2001-497, s.

2(a); 2009-550, s. 2(e); 2010-95, s. 5; 2013-360, s. 34.29(a); 2013-363, s. 8.1; 2014-3, s. 6.1(g);

2014-39, s. 3; 2015-241, s. 29.34A(a); 2015-259, s. 5(d); 2015-268, s. 10.1(d).)


(a) Method. The tax imposed by this Article must be paid to the Commissioner when

applying for a certificate of title for a motor vehicle. The Commissioner may not issue a

certificate of title for a vehicle until the tax imposed by this Article has been paid. The tax may

be paid in cash or by check.

(b) Sale by Retailer. When a certificate of title for a motor vehicle is issued because of a

sale of the motor vehicle by a retailer, the applicant for the certificate of title must attach a copy

of the bill of sale for the motor vehicle to the application. A retailer who sells a motor vehicle

may collect from the purchaser of the vehicle the tax payable upon the issuance of a certificate of

title for the vehicle, apply for a certificate of title on behalf of the purchaser, and remit the tax

due on behalf of the purchaser. If a check submitted by a retailer in payment of taxes collected

under this section is not honored by the financial institution upon which it is drawn because the

retailer's account did not have sufficient funds to pay the check or the retailer did not have an

account at the institution, the Division may suspend or revoke the license issued to the retailer

under Article 12 of Chapter 20 of the General Statutes. (1989, c. 692, s. 4.1; 1991, c. 193, s. 1.)

§ 105-187.5. Alternate tax for those who rent or lease motor vehicles.

(a) (Effective until March 1, 2016) Election. – A retailer may elect not to pay the tax

imposed by this Article at the rate set in G.S. 105-187.3 when applying for a certificate of title

for a motor vehicle purchased by the retailer for lease or rental. A retailer who makes this

election shall pay a tax on the gross receipts of the lease or rental of the vehicle. The portion of a

lease or rental billing or payment that represents any amount applicable to the sales price of or

sales tax on a service contract sold at retail that is subject to the tax imposed by Article 5 of this

Chapter and sourced to this State should not be included in the gross receipts subject to the tax

imposed by this Article. The amount of the lease or rental billing or payment applicable to the

sales price of or sales tax on a service contract sold at retail subject to the tax imposed by Article

5 of this Chapter and sourced to the State should be separately stated on documentation given to

the purchaser at the time the lease or rental agreement goes into effect, or on the monthly billing

statement or other documentation given to the purchaser. Like the tax imposed by G.S.

105-187.3, this alternate tax is a tax on the privilege of using the highways of this State. The tax

is imposed on a retailer, but is to be added to the lease or rental price of a motor vehicle and

thereby be paid by the person who leases or rents the vehicle.

(a) (Effective March 1, 2016) Election. – A retailer may elect not to pay the tax imposed

by this Article at the rate set in G.S. 105-187.3 when applying for a certificate of title for a motor


vehicle purchased by the retailer for lease or rental. A retailer who makes this election shall pay a

tax on the gross receipts of the lease or rental of the vehicle. The portion of a lease or rental

billing or payment that represents any amount applicable to the sales price of a service contract

as defined in G.S. 105-164.3 should not be included in the gross receipts subject to the tax

imposed by this Article. The charge should be separately stated on documentation given to the

purchaser at the time the lease or rental agreement goes into effect, or on the monthly billing

statement or other documentation given to the purchaser. Where a retailer fails to separately state

any portion of a lease or rental billing or payment that represents an amount applicable to the

sale price of a service contract, the amount is deemed to be part of the gross receipts of a lease or

rental of a vehicle. Like the tax imposed by G.S. 105-187.3, this alternate tax is a tax on the

privilege of using the highways of this State. The tax is imposed on a retailer, but is to be added

to the lease or rental price of a motor vehicle and thereby be paid by the person who leases or

rents the vehicle.

(b) Rate. – The tax rate on the gross receipts from the short-term lease or rental of a

motor vehicle is eight percent (8%) and the tax rate on the gross receipts from the long-term

lease or rental of a motor vehicle is three percent (3%). Gross receipts does not include the

amount of any allowance given for a motor vehicle taken in trade as a partial payment on the

lease or rental price. The maximum tax in G.S. 105-187.3(a) on certain motor vehicles applies to

a continuous lease or rental of such a motor vehicle to the same person.

(c) Method. – A retailer who elects to pay tax on the gross receipts of the lease or rental

of a motor vehicle shall make this election when applying for a certificate of title for the vehicle.

To make the election, the retailer shall complete a form provided by the Division giving

information needed to collect the alternate tax based on gross receipts. Once made, an election is

irrevocable.

(d) Administration. – The Division shall notify the Secretary of Revenue of a retailer who

makes the election under this section. A retailer who makes this election shall report and remit to

the Secretary the tax on the gross receipts of the lease or rental of the motor vehicle. The

Secretary shall administer the tax imposed by this section on gross receipts in the same manner

as the tax levied under G.S. 105-164.4(a)(2). The administrative provisions and powers of the

Secretary that apply to the tax levied under G.S. 105-164.4(a)(2) apply to the tax imposed by this

section. In addition, the Division may request the Secretary to audit a retailer who elects to pay

tax on gross receipts under this section. When the Secretary conducts an audit at the request of

the Division, the Division shall reimburse the Secretary for the cost of the audit, as determined

by the Secretary. In conducting an audit of a retailer under this section, the Secretary may audit

any sales of motor vehicles made by the retailer. (1989, c. 692, s. 4.1; 1991, c. 79, s. 5; c. 193, s.

3; 1995, c. 410, s. 1; 2000-173, s. 10(b); 2001-424, s. 34.24(b); 2001-497, s. 2(c); 2014-3, s.

6.1(h); 2015-259, s. 5(e).)

§ 105-187.6. Exemptions from highway use tax.

(a) Full Exemptions. – The tax imposed by this Article does not apply when a certificate

of title is issued as the result of a transfer of a motor vehicle:

(1) To (i) the insurer of the motor vehicle under G.S. 20-109.1 because the

vehicle is a salvage vehicle or (ii) a used motor vehicle dealer under G.S.

20-109.1 because the vehicle is a salvage vehicle that was abandoned.

(2) To either a manufacturer, as defined in G.S. 20-286, or a motor vehicle

retailer for the purpose of resale.


(3) To the same owner to reflect a change or correction in the owner's name.

(3a) To one or more of the same co-owners to reflect the removal of one or more

other co-owners, when there is no consideration for the transfer.

(4) By will or intestacy.

(5) By a gift between a husband and wife, a parent and child, or a stepparent and a

stepchild.

(6) By a distribution of marital or divisible property incident to a marital

separation or divorce.


(8) To a local board of education for use in the driver education program of a

public school when the motor vehicle is transferred:

a. By a retailer and is to be transferred back to the retailer within 300

days after the transfer to the local board.

b. By a local board of education.

(9) To a volunteer fire department or volunteer rescue squad that is not part of a

unit of local government, has no more than two paid employees, and is

exempt from State income tax under G.S. 105-130.11, when the motor vehicle

is one of the following:

a. A fire truck, a pump truck, a tanker truck, or a ladder truck used to

suppress fire.

b. A four-wheel drive vehicle intended to be mounted with a water tank

and hose and used for forest fire fighting.

c. An emergency services vehicle.

(10) To a State agency from a unit of local government, volunteer fire department,

or volunteer rescue squad to enable the State agency to transfer the vehicle to

another unit of local government, volunteer fire department, or volunteer

rescue squad.

(11) To a revocable trust from an owner who is the sole beneficiary of the trust.

(b) Partial Exemptions. – A maximum tax of forty dollars ($40.00) applies when a

certificate of title is issued as the result of a transfer of a motor vehicle:

(1) To a secured party who has a perfected security interest in the motor vehicle.

(2) To a partnership, limited liability company, corporation, trust, or other person

where no gain or loss arises on the transfer of the motor vehicle under section

351 or section 721 of the Code, or because the transfer is treated under the

Code as being to an entity that is not a separate entity from its owner or whose

separate existence is otherwise disregarded, or to a partnership, limited

liability company, or corporation by merger, conversion, or consolidation in

accordance with applicable law.

(c) Out-of-state Vehicles. – A maximum tax of two hundred fifty dollars ($250.00)

applies when a certificate of title is issued for a motor vehicle that, at the time of applying for a

certificate of title, is and has been titled in the name of the owner of the motor vehicle in another

state for at least 90 days prior to the date of application for a certificate of title in this State.

(1989, c. 692, s. 4.1; c. 770, ss. 74.9, 74.10; 1991, c. 193, s. 4; c. 689, s. 323; 1993, c. 467, s. 1;

1995, c. 390, s. 31; 1997-443, s. 11A.118(a); 1998-98, s. 15.1; 1999-369, s. 5.9; 2000-140, s. 68;

2001-387, s. 151; 2001-424, s. 34.24(d); 2001-487, s. 68; 2009-81, s. 2; 2009-445, s. 16;

2010-95, s. 6; 2013-400, s. 6; 2015-241, ss. 29.34(a), 29.34A(b); 2015-268, s. 10.1(d).)


§ 105-187.7. Credits.

(a) Tax Paid in Another State. – A person who, within 90 days before applying for a

certificate of title for a motor vehicle on which the tax imposed by this Article is due, has paid a

sales tax, an excise tax, or a tax substantially equivalent to the tax imposed by this Article on the

vehicle to a taxing jurisdiction outside this State is allowed a credit against the tax due under this

Article for the amount of tax paid to the other jurisdiction.

(b) Tax Paid Within One Year. – A person who applies for a certificate of title for a

motor vehicle that is titled in another state but was formerly titled in this State is allowed a credit

against the tax due under this Article for the amount of tax paid under this Article by that person

on the same vehicle within one year before the application for a certificate of title. (1989, c. 692,

s. 4.1; 1995, c. 390, s. 32; c. 512, s. 1.)

§ 105-187.8. Refund for return of purchased motor vehicle.

When a purchaser of a motor vehicle returns the motor vehicle to the seller of the motor

vehicle within 90 days after the purchase and receives a vehicle replacement for the returned

vehicle or a refund of the price paid the seller, whether from the seller or the manufacturer of the

vehicle, the purchaser may obtain a refund of the privilege tax paid on the certificate of title

issued for the returned motor vehicle.

To obtain a refund, the purchaser must apply to the Division for a refund within 30 days after

receiving the replacement vehicle or refund of the purchase price. The application must be made

on a form prescribed by the Commission and must be supported by documentation from the

seller of the returned vehicle. (1989, c. 692, s. 4.1; 1995, c. 390, s. 33.)

§ 105-187.9. Disposition of tax proceeds.

(a) Distribution. – Taxes collected under this Article at the rate of eight percent (8%)

shall be credited to the General Fund. Taxes collected under this Article at the rate of three

percent (3%) shall be credited to the North Carolina Highway Trust Fund.

(b) Repealed by Session Laws 2010-31, s. 28.7(i), and Session Laws 2013-183, s. 4.1,

effective July 1, 2013.

(c) Repealed by Session Laws 2013-183, s. 4.1, effective July 1, 2013. (1989, c. 692, s.

4.1; c. 799, s. 33; 1993, c. 321, s. 164(a); 2001-424, s. 34.24(c); 2001-513, s. 15; 2008-107, s.

25.5(a), (c), (e); 2010-31, s. 28.7(f), (h)-(j); 2011-145, ss. 28.33(c), (d); 2011-391, s. 57;

2012-142, s. 24.8(b); 2013-183, s. 4.1.)

§ 105-187.10. Penalties and remedies.

(a) Penalties. – The penalty for bad checks in G.S. 105-236(1) applies to a check offered

in payment of the tax imposed by this Article. In addition, if a check offered to the Division in

payment of the tax imposed by this Article is returned unpaid and the tax for which the check

was offered, plus the penalty imposed under G.S. 105-236(1), is not paid within 30 days after the

Commissioner demands its payment, the Commissioner may revoke the registration plate of the

vehicle for which a certificate of title was issued when the check was offered.

(b) Unpaid Taxes. – The remedies for collection of taxes in Article 9 of this Chapter

apply to the taxes levied by this Article and collected by the Commissioner. In applying these

remedies, the Commissioner has the same authority as the Secretary.


(c) Appeals. – A taxpayer who disagrees with the presumed value of a motor vehicle

must pay the tax based on the presumed value, but may appeal the value to the Commissioner. A

taxpayer who appeals the value must provide two estimates of the value of the vehicle to the

Commissioner. If the Commissioner finds that the value of the vehicle is less than the presumed

value of the vehicle, the Commissioner shall refund any overpayment of tax made by the

taxpayer with interest at the rate specified in G.S. 105-241.21 from the date of the overpayment.

(1989, c. 692, s. 4.1; c. 770, s. 74.8; 2007-491, ss. 21, 44(1)b.)



Article 5B.

Scrap Tire Disposal Tax.


The definitions in G.S. 105-164.3 apply to this Article, except that the term "sale" does not

include lease or rental, and the following definitions apply to this Article:

(1) Scrap tire. – A tire that is no longer suitable for its original, intended purpose

because of wear, damage, or defect.

(2) Tire. – A continuous solid or pneumatic rubber covering encircling a wheel.

(1991, c. 221, s. 1.)

§ 105-187.16. Tax imposed.

(a) Levy. A privilege tax is imposed on a tire retailer at a percentage rate of the sales

price of each new tire sold at retail by the retailer. A privilege tax is imposed on a tire retailer

and on a tire wholesale merchant at a percentage rate of the sales price of each new tire sold by

the retailer or wholesale merchant to a wholesale merchant or retailer for placement on a vehicle

offered for sale, lease, or rental by the retailer or wholesale merchant. An excise tax is imposed

on a new tire purchased for storage, use, or consumption in this State or for placement in this

State on a vehicle offered for sale, lease, or rental. This excise tax is a percentage rate of the

purchase price of the tire. These taxes are in addition to all other taxes.

(b) Rate. The percentage rate of the taxes imposed by subsection (a) of this section is set

by the following table; the rate is based on the bead diameter of the new tire sold or purchased:

Bead Diameter of Tire Percentage Rate

Less than 20 inches 2%

At least 20 inches 1%.

(1991, c. 221, s. 1; 1993, c. 548, s. 1; 1997-209, s. 1; 2001-414, s. 22; 2002-10, s. 1.)

§ 105-187.17. Administration.

The privilege tax this Article imposes on a tire retailer who sells new tires at retail is an

additional State sales tax and the excise tax this Article imposes on the storage, use, or

consumption of a new tire in this State is an additional State use tax. Except as otherwise

provided in this Article, these taxes shall be collected and administered in the same manner as

the State sales and use taxes imposed by Article 5 of this Chapter. As under Article 5 of this


Chapter, the additional State sales tax paid when a new tire is sold is a credit against the

additional State use tax imposed on the storage, use, or consumption of the same tire.

The privilege tax this Article imposes on a tire retailer and on a tire wholesale merchant who

sell new tires for placement in this State on a vehicle offered for sale, lease, or rental is a tax on

the wholesale sale of the tires. This tax and the excise tax this Article imposes on a new tire

purchased for placement in this State on a vehicle offered for sale, lease, or rental shall, to the

extent practical, be collected and administered as if they were additional State sales and use

taxes. The privilege tax paid when a new tire is sold for placement on a vehicle offered for sale,

lease, or rental is a credit against the use tax imposed on the purchase of the same tire for

placement in this State on a vehicle offered for sale, lease, or rental. (1991, c. 221, s. 1.)


(a) The taxes imposed by this Article do not apply to:

(1) Bicycle tires and other tires for vehicles propelled by human power.

(2) Recapped tires.

(3) Tires sold for placement on newly manufactured vehicles.

(b) Except for the exemption for sales a state cannot constitutionally tax, the exemptions

and refunds allowed in Article 5 of this Chapter do not apply to the taxes imposed by this

Article. (1991, c. 221, s. 1; 1991 (Reg. Sess., 1992), c. 867, s. 1; 1993, c. 364, s. 2; 2003-416, s.

19(a); 2010-166, s. 3.4.)


(a) The Secretary shall distribute the taxes collected under this Article, less the allowance

to the Department of Revenue for administrative expenses, in accordance with this section. The

Secretary may retain the cost of collection by the Department, not to exceed four hundred

twenty-five thousand dollars ($425,000) a year, as reimbursement to the Department.

(b) Each quarter, the Secretary shall credit thirty percent (30%) of the net tax proceeds to

the General Fund. The Secretary shall distribute the remaining seventy percent (70%) of the net

tax proceeds among the counties on a per capita basis according to the most recent annual

population estimates certified to the Secretary by the State Budget Officer.

(c) A county may use funds distributed to it under this section only as provided in G.S.

130A-309.54. A county that receives funds under this section and that has an agreement with

another unit of local government under which the other unit of local government provides for the

disposal of solid waste for the county shall transfer the amount received under this section to the

other unit of local government. A unit of local government to which funds are transferred is

subject to the same restrictions on use of the funds as the county. (1991, c. 221, s. 1; 1993, c.

485, s. 13; c. 548, ss. 2, 8; 1997-209, ss. 1, 3; 2004-203, s. 5(h); 2007-153, s. 1; 2007-323, s.

24.2; 2009-451, s. 13.3B(a); 2013-360, s. 14.16(a).)

Article 5C.

White Goods Disposal Tax.


The definitions in G.S. 105-164.3 apply to this Article, except that the term "sale" does not

include lease or rental, and the following definition applies to this Article:



(2) White goods. – Defined in G.S. 130A-290(a). (1993, c. 471, s. 3; 1998-24, s.

7; 2000-109, s. 9(a); 2005-435, s. 35.)

§ 105-187.21. Tax imposed.

A privilege tax is imposed on a white goods retailer at a flat rate for each new white good

that is sold by the retailer. An excise tax is imposed on a new white good purchased outside the

State for storage, use, or consumption in this State. The rate of the privilege tax and the excise

tax is three dollars ($3.00). These taxes are in addition to all other taxes. (1993, c. 471, s. 3;

1998-24, ss. 1, 7; 2000-109, s. 9(a).)


The privilege tax this Article imposes on a white goods retailer is an additional State sales tax

and the excise tax this Article imposes on the storage, use, or consumption of a new white good

in this State is an additional State use tax. Except as otherwise provided in this Article, these

taxes shall be collected and administered in the same manner as the State sales and use taxes

imposed by Article 5 of this Chapter. As under Article 5 of this Chapter, the additional State

sales tax paid when a new white good is sold at retail is a credit against the additional State use

tax imposed on the storage, use, or consumption of the same white good. (1993, c. 471, s. 3;

1998-24, s. 7; 2000-109, s. 9(a).)

§ 105-187.23. Exemptions and refunds.

(a) Exemptions. – Except for the exemption for sales a state cannot constitutionally tax,

the exemptions allowed in Article 5 of this Chapter do not apply to the taxes imposed by this

Article.

(b) Refunds. – The refunds allowed in Article 5 of this Chapter do not apply to the taxes

imposed by this Article. A person who buys at least 50 new white goods of any kind in the same

sale or purchase may obtain a refund equal to sixty percent (60%) of the amount of tax imposed

by this Article on the white goods when all of the white goods purchased are to be placed in new

or remodeled dwelling units that are located in this State and do not contain the kind of white

goods purchased. To obtain a refund, a person must file an application for a refund with the

Secretary. The application must contain the information required by the Secretary, be signed by

the purchaser of the white goods, and be submitted by the date set by the Secretary. (1993, c.

471, s. 3; 1998-24, s. 7; 2000-109, s. 9(a); 2003-416, s. 19(b); 2010-166, s. 3.5.)


The Secretary shall distribute the taxes collected under this Article, less the Department of

Revenue's allowance for administrative expenses, in accordance with this section. The Secretary

may retain the Department's cost of collection, not to exceed four hundred twenty-five thousand

dollars ($425,000) a year, as reimbursement to the Department.

Each quarter, the Secretary shall credit twenty-eight percent (28%) of the net tax proceeds to

the General Fund. The Secretary shall distribute the remaining seventy-two percent (72%) of the

net tax proceeds among the counties on a per capita basis according to the most recent annual

population estimates certified to the Secretary by the State Budget Officer. The Department shall

not distribute the tax proceeds to a county when notified not to do so by the Department of

Environmental Quality under G.S. 130A-309.87. If a county is not entitled to a distribution, the

proceeds allocated for that county will be credited to the White Goods Management Account.


A county may use funds distributed to it under this section only as provided in G.S.

130A-309.82. A county that receives funds under this section and that has an interlocal

agreement with another unit of local government under which the other unit provides for the

disposal of solid waste for the county must transfer the amount received under this section to that

other unit. A unit to which funds are transferred is subject to the same restrictions on use of the

funds as the county. (1993, c. 471, s. 3; 1993 (Reg. Sess., 1994), c. 769, s. 15.1(b); 1998-24, ss.

2, 7; 2000-109, s. 9(a); 2004-203, s. 5(i); 2007-323, s. 24.1; 2013-360, s. 14.17(a); 2015-241, s.

14.30(u).)


Article 5D.

Dry-Cleaning Solvent Tax.

(Repealed effective January 1, 2020)

§ 105-187.30. (See note for repeal of Article) Definitions.

The definitions in G.S. 105-164.3 apply to this Article, and the following definitions apply to

this Article:

(1) Dry-cleaning facility. – Defined in G.S. 143-215.104B.

(2) Dry-cleaning solvent. – Defined in G.S. 143-215.104B. (1997-392, s. 4;

2009-483, s. 5.)

§ 105-187.31. (See note for repeal of Article) Tax imposed.

A privilege tax is imposed on a dry-cleaning solvent retailer at a flat rate for each gallon of

dry-cleaning solvent sold by the retailer to a dry-cleaning facility. An excise tax is imposed on

dry-cleaning solvent purchased outside the State for storage, use, or consumption by a

dry-cleaning facility in this State. The rate of the privilege tax and the excise tax is ten dollars

($10.00) for each gallon of halogenated hydrocarbon-based dry-cleaning solvent and one dollar

and thirty-five cents ($1.35) for each gallon of hydrocarbon-based dry-cleaning solvent. These

taxes are in addition to all other taxes. (1997-392, s. 4; 2000-19, s. 1.2; 2001-265, s. 1;

2007-530, s. 13; 2009-483, ss. 5, 6.)

§ 105-187.32. (See note for repeal of Article) Administration.

The privilege tax this Article imposes on a dry-cleaning solvent retailer is an additional State

sales tax, and the excise tax this Article imposes on the storage, use, or consumption of

dry-cleaning solvent by a dry-cleaning facility in this State is an additional State use tax. Except

as otherwise provided in this Article these taxes shall be collected and administered in the same

manner as the State sales and use taxes imposed by Article 5 of this Chapter. As under Article 5

of this Chapter, the additional State sales tax paid when dry-cleaning solvent is sold at retail is a

credit against the additional State use tax imposed on the storage, use, or consumption of the

same dry-cleaning solvent. (1997-392, s. 4; 2009-483, s. 5.)

§ 105-187.33. (See note for repeal of Article) Exemptions and refunds.


Except for the exemption for sales a state cannot constitutionally tax, the exemptions and

refunds allowed in Article 5 of this Chapter do not apply to the taxes imposed by this Article.

(1997-392, s. 4; 2003-416, s. 19(c); 2009-483, s. 5; 2010-166, s. 3.6.)

§ 105-187.34. (See note for repeal of Article) Use of tax proceeds.

The Secretary must credit the taxes collected under this Article, less the Department of

Revenue's allowance for administrative expenses, to the Dry-Cleaning Solvent Cleanup Fund.

The Secretary may retain the Department's cost of collection, not to exceed one hundred

twenty-five thousand dollars ($125,000) a year, as reimbursement to the Department. (1997-392,

s. 4; 2009-483, s. 5.)

§ 105-187.35. Sunset.

This Article is repealed effective January 1, 2020. (2009-483, s. 9.)





Article 5E.

Piped Natural Gas Tax.

§§ 105-187.40 through 105-187.46: Repealed by Session Laws 2013-316, s. 4.1(d), effective

July 1, 2014, and applicable to gross receipts billed on or after that date.




Article 5F.

Certain Machinery and Equipment.


The definitions in G.S. 105-164.3 apply in this Article. (2001-347, s. 2.17; 2007-323, s.

31.22(a); 2009-451, s. 27A.3(v); 2010-91, s. 5.)

§ 105-187.51. Tax imposed on mill machinery.

(a) Scope. – A privilege tax is imposed on the following persons:


(1) A manufacturing industry or plant that purchases mill machinery or mill

machinery parts or accessories for storage, use, or consumption in this State.

A manufacturing industry or plant does not include the following:

a. A delicatessen, cafe, cafeteria, restaurant, or another similar retailer

that is principally engaged in the retail sale of foods prepared by it for

consumption on or off its premises.

b. A production company.

(2) A contractor or subcontractor that purchases mill machinery or mill machinery

parts or accessories for use in the performance of a contract with a

manufacturing industry or plant.

(3) A subcontractor that purchases mill machinery or mill machinery parts or

accessories for use in the performance of a contract with a general contractor

that has a contract with a manufacturing industry or plant.

(b) Rate. – The tax is one percent (1%) of the sales price of the machinery, part, or

accessory purchased. The maximum tax is eighty dollars ($80.00) per article. As used in this

section, the term "accessories" does not include electricity. (2001-347, s. 2.17; 2005-435, s.

56(a); 2010-147, s. 2.3.)

§ 105-187.51A: Repealed by Session Laws 2007-397, s. 12(d) effective July 1, 2010.

§ 105-187.51B. Tax imposed on certain recyclers, research and development companies,

industrial machinery refurbishing companies, and companies located at ports

facilities.

(a) Tax. – A privilege tax is imposed on the following:

(1) A major recycling facility that purchases any of the following tangible

personal property for use in connection with the facility:

a. Cranes, structural steel crane support systems, and foundations related

to the cranes and support systems.

b. Port and dock facilities.

c. Rail equipment.

d. Material handling equipment.

(2) A company primarily engaged at the establishment in research and

development activities in the physical, engineering, and life sciences included

in industry 54171 of NAICS and that purchases equipment or an attachment or

repair part for equipment that meets all of the following requirements:

a. Is capitalized by the company for tax purposes under the Code.

b. Is used by the company at the establishment in the research and

development of tangible personal property.

c. Would be considered mill machinery or mill machinery parts or

accessories under G.S. 105-187.51 if it were purchased by a

manufacturing industry or plant and used in the research and

development of tangible personal property manufactured by the

industry or plant.

(3) A company primarily engaged at the establishment in software publishing

activities included in industry group 5112 of NAICS and that purchases


equipment or an attachment or repair part for equipment that meets all of the



b. Is used by the company at the establishment in the research and

development of tangible personal property.

c. Would be considered mill machinery under G.S. 105-187.51 if it were

purchased by a manufacturing industry or plant and used in the

research and development of tangible personal property manufactured

by the industry or plant.

(4) A company primarily engaged at the establishment in industrial machinery

refurbishing activities included in industry group 811310 of NAICS and that

purchases equipment or an attachment or repair part for equipment that meets

all of the following requirements:


b. Is used by the company at the establishment in repairing or

refurbishing tangible personal property.

c. Would be considered mill machinery under G.S. 105-187.51 if it were

purchased by a manufacturing industry or plant and used by the

industry or plant to manufacture tangible personal property.

(5) A company located at a ports facility for waterborne commerce that purchases

specialized equipment to be used at the facility to unload or process bulk

cargo to make it suitable for delivery to and use by manufacturing facilities.

(b) Rate. – The tax is one percent (1%) of the sales price of the equipment or other

tangible personal property. The maximum tax is eighty dollars ($80.00) per article. (2005-276, s.

33.21; 2006-66, s. 24.9(a); 2006-196, s. 12; 2007-323, s. 31.7(a); 2007-527, s. 13(a); 2008-107,

s. 28.21(a); 2011-302, s. 1; 2013-414, s. 46.)

§ 105-187.51C. (Expiring for sales occurring on or after July 1, 2015) Tax imposed on

datacenter machinery and equipment.

(a) Tax. – A privilege tax is imposed on the owner of a datacenter that meets the

requirements of subsection (a1) of this section and that purchases machinery or equipment to be

located and used at the datacenter that is capitalized for tax purposes under the Code and is used

either:

(1) For the provision of datacenter services, including equipment cooling systems

for managing the performance of the datacenter property; hardware for

distributed and mainframe computers and servers; data storage devices;

network connectivity equipment and peripheral components and systems.

(2) For the generation, transformation, transmission, distribution, or management

of electricity, including exterior substations and other business personal

property used for these purposes.

(a1) Requirements. – The Secretary of Commerce must certify that the datacenter meets

all of the following requirements:

(1) The investment requirements of this subdivision. The level of investment

required by this subdivision must consist of private funds that have been or

will be made in real and tangible personal property for the facility within five


years of the date on which the first property investment is made by the owner

of the facility.

a. For facilities located in a development tier one area, at least one

hundred fifty million dollars ($150,000,000).

b. For facilities located in a development tier two area or a development

tier three area, at least two hundred twenty-five million dollars

($225,000,000).

(2) The wage standard requirements of G.S. 105-129.83.

(3) The health insurance requirements of G.S. 105-129.83.

(a2) Second Datacenter. – A privilege tax is imposed on an owner of a datacenter that is

subject to tax under subsection (a) of this section, constructs a second datacenter, and purchases

machinery or equipment to be located and used at that datacenter. As used in this subsection, the

owner of a datacenter includes an entity that is owned by or under common control with the

owner of a datacenter subject to tax under subsection (a) of this section. The tax applies only if

the second datacenter meets the following requirements and the machinery or equipment that is

purchased is capitalized for tax purposes under the Code and is used for one of the purposes

listed in subsection (a) of this section:

(1) The Secretary of Commerce certifies that an investment of private funds of at

least seventy-five million dollars ($75,000,000) has been or will be made in

real and tangible personal property for the facility within five years after the

facility subject to tax under subsection (a) of this section is placed into service

and that the datacenter meets the requirements in subsection (a1) of this

section, other than the minimum investment amount in that subsection.

(2) The two datacenters are linked through a fiber-optic connection or a similar

connection.

(3) The datacenters are placed in service within five years of each other.

(a3) Contractor Option. – A contractor or subcontractor that is subject to this subsection

may elect to pay tax on its purchases of machinery and equipment described in subsection (a) of

this section at the rate set in this section instead of the rate set in Article 5 of this Chapter. To

make this election, a contractor or subcontractor must register with the Secretary for payment of

tax under this section. The following contractors and subcontractors are subject to this section:

(1) A contractor that purchases the machinery and equipment for use in the

performance of a contract with the owner of a datacenter subject to tax under

this section.

(2) A subcontractor that purchases the machinery and equipment for use in the

performance of a contract with a general contractor that has a contract with

the owner of a datacenter subject to tax under this section.

(b) Rate and Scope. – The tax is one percent (1%) of the sales price of the eligible

equipment and machinery. The maximum tax is eighty dollars ($80.00) per article. The tax does

not apply to equipment and machinery of an eligible Internet datacenter that is exempt from sales

tax under G.S. 105-164.13(55).

(c) Forfeiture. – If the required level of investment to qualify as an eligible datacenter is

not timely made, then the rate provided under this section is forfeited. If the required level of

investment is timely made but any eligible machinery and equipment is not located and used at

an eligible datacenter, then the rate provided for that machinery and equipment under this section

is forfeited. A taxpayer that forfeits a rate under this section is liable for all past sales and use


taxes avoided as a result of the forfeiture, computed at the applicable State and local rates from

the date the taxes would otherwise have been due, plus interest at the rate established under G.S.

105-241.21. If the forfeiture is triggered due to the lack of a timely investment required by this

section, then interest is computed from the date the sales or use tax would otherwise have been

due. For all other forfeitures, interest is computed from the time as of which the machinery or

equipment was put to a disqualifying use. A credit is allowed against the State sales or use tax

owed as a result of the forfeiture provisions of this subsection for privilege taxes paid pursuant to

this section. For purposes of applying this credit, the fact that payment of the privilege tax

occurred in a period outside the statute of limitations provided under G.S. 105-241.6 is not

considered. The credit reduces the amount forfeited, and interest applies only to the reduced

amount. The past taxes and interest are due 30 days after the date of forfeiture. A taxpayer that

fails to pay the past taxes and interest by the due date is subject to the provisions of G.S.

105-236.

(d) Sunset. – This section expires for sales occurring on or after July 1, 2015. (2007-323,

s. 31.22(b); 2009-445, s. 17; 2010-91, ss. 6, 7; 2011-330, ss. 22, 24.)

§ 105-187.51D. (Effective July 1, 2013 and expiring July 1, 2018) Tax imposed on

machinery at large manufacturing and distribution facility.

(a) Definition. – For the purposes of this section, a "large manufacturing and distribution

facility" is a facility that is to be used primarily for manufacturing or assembling products and

distributing finished products for which the Secretary of Commerce makes a certification that an

investment of private funds of at least eighty million dollars ($80,000,000) has been or will be

made in real and tangible personal property for the facility within five years after the date on

which the first property investment is made and that the facility will achieve an employment

level of at least 550 within five years after the date the facility is placed into service and maintain

that minimum level of employment throughout its operation.

(b) Tax. – A privilege tax is imposed on a large manufacturing and distribution facility

that purchases mill machinery, distribution machinery, or parts or accessories for mill machinery

or distribution machinery for storage, use, or consumption in this State. The tax is one percent

(1%) of the sales price of the machinery, part, or accessory purchased. The maximum tax is

eighty dollars ($80.00) per article. As used in this section, the term "accessories" does not

include electricity.

(c) Forfeiture. – If the required level of investment or employment to qualify as [a] large

manufacturing and distribution facility is not timely made, achieved, or maintained, then the rate

provided under this section is forfeited. If the rate is forfeited due to a failure to timely make the

required investment or to timely achieve the minimum required employment level, then the rate

provided under this section is forfeited on all purchases. If the rate is forfeited due to a failure to

maintain the minimum required employment level once that level has been achieved, then the

rate provided under this section is forfeited for those purchases occurring on or after the date the

taxpayer fails to maintain the minimum required employment level.

A taxpayer that forfeits a rate under this section is liable for all past sales and use taxes

avoided as a result of the forfeiture, computed at the applicable State and local rates from the

date the taxes would otherwise have been due, plus interest at the rate established under G.S.

105-241.21. Interest is computed from the date the sales or use tax would otherwise have been

due. A credit is allowed against the State sales or use tax owed as a result of the forfeiture

provisions of this subsection for privilege taxes paid pursuant to this section. For purposes of


applying this credit, the fact that payment of the privilege tax occurred in a period outside the

statute of limitations provided under G.S. 105-241.6 is not considered. The credit reduces the

amount forfeited, and interest applies only to the reduced amount. The past taxes and interest are

due 30 days after the date of forfeiture. A taxpayer that fails to pay the past taxes and interest by

the due date is subject to the provisions of G.S. 105-236.

(d) Sunset. – This section expires for sales occurring on or after July 1, 2018. (2011-302,

s. 2.)


(a) Administration. – The privilege taxes imposed by this Article are in lieu of the State

use tax. Except as otherwise provided in this Article, the collection and administration of these

taxes is the same as the State use tax imposed by Article 5 of this Chapter.

(b) Credit. – A credit is allowed against the tax imposed by this Article for the amount of

a sales or use tax, privilege or excise tax, or substantially equivalent tax due and paid to another

state or for the amount of sales and use tax paid to this State. The credit allowed by this

subsection does not apply to tax paid to another state that does not grant a similar credit for the

privilege tax paid in North Carolina.

(c) Exemption. – State agencies are exempted from the privilege taxes imposed by this

Article. The exemption in G.S. 105-164.13(62) does not apply to an item used to maintain or

repair tangible personal property pursuant to a service contract exempt from tax under G.S.

105-164.4I(b)(4). (2001-347, s. 2.17; 2005-276, s. 33.22; 2006-162, s. 11; 2007-527, s. 14;

2011-330, s. 25(b); 2013-414, s. 16; 2015-6, s. 2.23(b).)

§ 105-187.53. Commercial logging items.

This Article does not apply to an item that is exempt from sales and use tax under G.S.

105-164.13(4f). (2006-19, s. 2.)







Article 5G.

Solid Waste Disposal Tax.


The definitions set out in G.S. 105-164.3 and G.S. 130A-290 apply to this Article.

(2007-550, s. 14(a).)


§ 105-187.61. Tax imposed.

(a) Tax Rate. – An excise tax is imposed on the disposal of municipal solid waste and

construction and demolition debris in any landfill permitted pursuant to Article 9 of Chapter

130A of the General Statutes at a rate of two dollars ($2.00) per ton of waste. An excise tax is

imposed on the transfer of municipal solid waste and construction and demolition debris to a

transfer station permitted pursuant to Article 9 of Chapter 130A of the General Statutes for

disposal outside the State at a rate of two dollars ($2.00) per ton of waste.

(b) Tax Liability. – The excise tax imposed by this section is due on municipal solid

waste and construction and demolition debris received from third parties and on municipal solid

waste and construction and demolition debris disposed of by the owner or operator. The tax is

payable by the owner or operator of each landfill and transfer station permitted under Article 9 of

Chapter 130A of the General Statutes. (2007-550, s. 14(a).)


(a) Collection. – The owner or operator of each landfill and transfer station permitted

pursuant to Article 9 of Chapter 130A of the General Statutes must maintain scales designed to

determine waste tonnage that are approved by the Department of Agriculture and Consumer

Services. Each owner or operator must record waste tonnage disposed of in a landfill or

transferred to a station for disposal outside the State and must maintain other records as required

by the Secretary of Revenue. An owner or operator may add the amount of the solid waste

disposal tax due to the charges made to a third party for disposal of municipal solid waste or

construction and demolition debris.

(b) Payment. – The tax imposed by this Article is payable when a return is due. A return

and payment are due on a quarterly basis. A quarterly return covers a calendar quarter and is due

by the last day of the month following the end of the quarter.

(c) Bad Debt Deduction. – In the event that an owner or operator pays the tax on tonnage

received from a customer and the account of that customer is found to be worthless and charged

off for income tax purposes, the owner or operator may recover the tax paid on the tonnage it

received but for which it was never compensated. The tax shall be recovered by reducing the

overall tonnage on which the owner or operator pays tax in a calendar quarter by the tonnage for

which it was never compensated from the worthless account. A local government that has paid

tax on an account that is subsequently found to be worthless shall recover the tax paid in the

same manner, if it meets all the conditions for recovery that would apply if the local government

were subject to income tax. If the owner or operator subsequently collects on an account that has

been declared worthless, any tax recovered must be repaid in the next calendar quarter.

(2007-550, s. 14(a); 2008-207, s. 1.)


From the taxes received pursuant to this Article, the Secretary may retain the costs of

collection, not to exceed two hundred twenty-five thousand dollars ($225,000) a year, as

reimbursement to the Department. The Secretary must credit or distribute taxes received

pursuant to this Article, less the cost of collection, on a quarterly basis as follows:

(1) Fifty percent (50%) to the Inactive Hazardous Sites Cleanup Fund established

by G.S. 130A-310.11.

(2) Thirty-seven and one-half percent (37.5%) to cities and counties in the State

on a per capita basis, using the most recent annual estimate of population


certified by the State Budget Officer. One-half of this amount must be

distributed to cities, and one-half of this amount must be distributed to

counties. For purposes of this distribution, the population of a county does not

include the population of a city located in the county.

A city or county is excluded from the distribution under this subdivision if

it does not provide solid waste management programs and services and is not

responsible by contract for payment for these programs and services. The

Department of Environmental Quality must provide the Secretary with a list

of the cities and counties that are excluded under this subdivision. The list

must be provided by May 15 of each year and applies to distributions made in

the fiscal year that begins on July 1 of that year.

Funds distributed under this subdivision must be used by a city or county

solely for solid waste management programs and services.

(3) Twelve and one-half percent (12.5%) to the General Fund. (2007-543, s. 2;

2007-550, s. 14(a); 2008-207, s. 2; 2009-484, s. 4; 2013-360, s. 14.18(a);

2015-241, s. 14.30(u).)







Article 5H.

911 Service Charge for Prepaid Wireless Telecommunications Service.

§ 105-187.70. Department to comply with Part 10 of Article 15 of Chapter 143B of the

General Statutes.

The Department of Revenue shall comply with the provisions of Part 10 of Article 15 of

Chapter 143B of the General Statutes to receive and transfer to the 911 Fund the 911 service

charge for prepaid wireless telecommunications service collected on retail transactions occurring

in this State. (2011-122, s. 6; 2012-79, s. 1.6; 2015-241, s. 7A.3.)







Article 5I.

Severance Tax.

§ 105-187.76. (Effective July 1, 2015) Definitions.


(1) Casinghead gas. – Gas or vapor indigenous to an oil stratum and produced

from the stratum with oil.

(2) Commission. – The Mining and Energy Commission.

(3) Condensate. – Liquid hydrocarbon that is or can be recovered from gas by a

separator or other means.

(4) Energy mineral. – All forms of natural gas, oil, and related condensates.

(5) First purchaser. – A person who purchases an energy mineral from a producer.

(6) Gas. – All natural gas, including casinghead gas, and all other hydrocarbons

not defined as condensates.

(7) Gross price. – The total price paid by the first purchaser of the energy mineral

at the wellhead.

(8) Marginal gas well. – A well incapable of producing more than 100 MCF per

day, as determined by the Commission using the current wellhead

deliverability rate methodology utilized by the Commission, during the

calendar month for which the severance tax report is filed.

(9) MCF. – One thousand cubic feet of natural gas.

(10) Oil. – Crude petroleum oil, and other hydrocarbons, regardless of gravity,

which are produced at the well in liquid form by ordinary production methods

and which are not the result of condensation of gas after it leaves the

reservoir.

(11) Owner. – An owner of a landowner's royalty interest, of an overriding royalty,

of profits and working interests, or any combination thereof in energy

minerals. The term does not include an owner of federal, State, or local

governmental royalty interest.


(13) Producer. – A person who takes an energy mineral from the soil or water in

this State.

(14) Return. – Any report or statement required to be filed under this Article to

determine the tax due.

(15) Royalty interest. – An interest in mineral rights in a producing leasehold in the

State. A royalty interest does not include the interest of a person having only

the management and operation of a well.


(17) Severance. – The extraction or other removal of an energy mineral from the

soil or water of this State.

(18) Severed. – The point at which the energy mineral has been separated from the

soil or water of this State.

(19) Standard barrel of oil. – A barrel of oil containing 42 gallons.


(20) Taxpayer. – Any person required to pay the severance tax levied by this

Article. (2014-4, s. 17(a).)

§ 105-187.77. (Effective July 1, 2015) Tax on severance of energy minerals.

(a) Purpose. – An excise tax is levied on the privilege of engaging in the severance of

energy minerals from the soil or water of this State. The purpose of the tax is to provide revenue

to administer and enforce the provisions of this Article, to administer the State's natural gas and

oil reclamation regulatory program, to meet the environmental and resource management needs

of this State, and to reclaim land affected by exploration for, drilling for, and production of

natural gas and oil. The severance tax is imposed upon all energy minerals severed when sold.

(b) Calculation of Tax. – The amount of the severance tax is calculated as follows:

(1) Condensates. – The applicable percentage rate of the gross price paid.

(2) Gas. – The applicable percentage rate of the market value as determined in

G.S. 105-187.78.

(3) Oil. – The applicable percentage rate of the gross price paid.

(c) (Effective July 1, 2015 until January 1, 2019) Oil and Condensates Rate. – The

percentage rate for condensates and oil is two percent (2%).

(c) (Effective January 1, 2019 until January 1, 2021) Oil and Condensates Rate. – The

percentage rate for condensates and oil is three and one-half percent (3.5%).

(c) (Effective January 1, 2021) Oil and Condensates Rate. – The percentage rate for

condensates and oil is five percent (5%).

(d) (Effective July 1, 2015 until January 1, 2019) Marginal Gas Rate. – The producer

of a proposed or existing gas well may apply to the Mining and Energy Commission for a

determination that the well qualifies as a marginal gas well. The producer may elect to have the

gas taxed at the marginal gas rate or the gas rate. For severance of gas from a marginal gas well

the percentage rate is four-tenths of one percent (0.4%).

(d) (Effective January 1, 2019 until January 1, 2021) Marginal Gas Rate. – The

producer of a proposed or existing gas well may apply to the Mining and Energy Commission for

a determination that the well qualifies as a marginal gas well. The producer may elect to have the

gas taxed at the marginal gas rate or the gas rate. For severance of gas from a marginal gas well

the percentage rate is six-tenths of one percent (0.6%).

(d) (Effective January 1, 2021) Marginal Gas Rate. – The producer of a proposed or

existing gas well may apply to the Mining and Energy Commission for a determination that the

well qualifies as a marginal gas well. The producer may elect to have the gas taxed at the

marginal gas rate or the gas rate. For severance of gas from a marginal gas well the percentage

rate is eight-tenths of one percent (0.8%).

(e) (Effective July 1, 2015 until January 1, 2019) Gas Rate. – The percentage rate for

gas is nine-tenths of one percent (0.9%).

(e) (Effective January 1, 2019 until January 1, 2021) Gas Rate. – The percentage rate

for gas is set in the table below. The tax rate is applied to the delivered to market value of the gas

sold.

Over Up to Rate

-0- $3.00 per MCF 0.9%

$3.01 per MCF $4.00 1.9%

$4.01 N/A 2.9%


(e) (Effective January 1, 2021 until January 1, 2023) Gas Rate. – The percentage rate

for gas is set in the table below. The tax rate is applied to the delivered to market value of the gas

sold.

Over Up to Rate

-0- $3.00 per MCF 0.9%

$3.01 per MCF $4.00 1.9%

$4.01 $5.00 2.9%

$5.01 $6.00 3.9%

$6.01 $7.00 4.9%

$7.01 N/A 5%

(e) (Effective January 1, 2023) Gas Rate. – The percentage rate for gas is set in the table

below. The tax rate is applied to the delivered to market value of the gas sold.

Over Up to Rate

-0- $3.00 per MCF 0.9%

$3.01 per MCF $4.00 1.9%

$4.01 $5.00 2.9%

$5.01 $6.00 3.9%

$6.01 $7.00 4.9%

$7.01 $8.00 5.9%

$8.01 $9.00 6.9%

$9.01 $10.00 7.9%

$10.01 N/A 9%

(2014-4, ss. 17(a), (d)-(f).)

§ 105-187.78. (Effective July 1, 2015) Delivered to Market Value.

(a) Delivered to Market Value of Natural Gas. – The delivered to market value of natural

gas is the total actual gross price as adjusted in this section. The delivered to market value of gas

is determined by subtracting the producer's actual costs to deliver the gas to the market from the

producer's total gross cash receipts from the sale of the natural gas. A producer receiving a cost

reimbursement from the gas purchaser shall include the reimbursement in the gross cash receipts

and is entitled to deduct the actual costs of delivering the gas to market incurred.

(b) Records. – In order to be eligible to subtract the actual costs to deliver the gas to the

market from the producer's gross receipts for purposes of calculating the delivered-to-market

value of natural gas, the producer shall provide any information required by the Secretary. Every

producer subtracting the costs to deliver the gas to the market as permitted under this subsection

shall maintain and make available for inspection by the Secretary any records the Secretary

considers necessary to determine and verify the amount of the costs to deliver the gas to the

market the producer is eligible to subtract. The burden of proving eligibility for subtracting the

costs to deliver the gas to the market and the amount of the costs to deliver the gas to the market

to be subtracted shall rest upon the producer, and no subtraction of costs to deliver the gas to the

market shall be allowed to a producer that fails to maintain adequate records or to make them

available for inspection.

(c) Costs to Deliver the Gas to the Market and Facilities Used to Deliver the Gas to the

Market. – A "facility used to deliver the gas to market" includes flow lines or gathering systems

from the separator to the purchaser's transmission line, compressor stations, dehydration units,

line heaters after the separator, and treating facilities. "Costs to deliver the gas to the market" are


the actual and reasonable costs incurred by the producer to get the gas from the mouth of the well

to the first purchaser, except costs incurred in normal lease separation of the oil or condensate

from the gas, and costs associated with insurance premiums on a facility used to deliver the gas

to market. Costs to deliver the gas to the market include only the following:

(1) Costs for compressing the gas sold.

(2) Costs for dehydrating the gas sold.

(3) Costs for sweetening and treating the gas sold.

(4) Costs for delivering the gas to the purchaser.

(5) Reasonable charges for depreciation of the facility used to deliver the gas to

market being used, provided that, if the facility is rented, the actual rental fee

is added.

(6) Costs of direct or allocated labor associated with the facility used to deliver

the gas to market.

(7) Costs of materials, supplies, maintenance, repairs, and fuel associated with the

facility used to deliver the gas to market.

(8) Property taxes paid on the facility used to deliver the gas to market.

(9) Charges for fees paid by the producer to any provider of dehydration, treating,

compression, and delivery services. (2014-4, s. 17(a).)

§ 105-187.79. (Effective July 1, 2015) On-site use exemption from the tax.

On-site use is exempt from the tax imposed under this Article. On-site use is the severance of

energy minerals from land or water in this State owned legally or beneficially by the producer,

which energy minerals are used on the land from which they are taken by the producer as part of

the improvement of or use in the producer's homestead and which have a yearly cumulative

delivered to market value of not greater than one thousand two hundred dollars ($1,200). When

severed energy minerals so used exceed a cumulative delivered to market value of one thousand

two hundred dollars ($1,200) during any year, the further severance of energy minerals shall be

subject to the tax imposed by this Article. (2014-4, s. 17(a).)

§ 105-187.80. (Effective July 1, 2015) Returns and payment of tax.

(a) General. – Severance taxes are payable when a return is due. A return is due quarterly

or monthly as specified in this section. A return must be filed by the producer of the energy

mineral with the Secretary on a form prescribed by the Secretary and in the manner required by

the Secretary. A return must be signed by the taxpayer or the taxpayer's agent.

(b) Payment. – A producer of energy minerals shall pay the tax for all owners of the

energy minerals. The producer shall withhold from any payment due owners the proportionate

tax due for remittance to the Secretary.

(c) Quarterly. – A taxpayer who is consistently liable for less than one thousand dollars

($1,000) a month in severance taxes must file a return and pay the taxes due on a quarterly basis.

A quarterly return covers a calendar quarter and is due by the 25th day of the second month

following the end of the quarter.

(d) Monthly. – A taxpayer who is consistently liable for at least one thousand dollars

($1,000) a month in severance taxes must file a return and pay the taxes due on a monthly basis.

A monthly return is due by the 25th day of the second month following the calendar month

covered by the return.


(e) Category. – The Secretary must monitor the amount of severance taxes paid by a

taxpayer or estimate the amount of taxes to be paid by a new taxpayer and must direct each

taxpayer to pay tax and file returns as required by this section. In determining the amount of

taxes due from a taxpayer, the Secretary must consider the total amount due from all places of

business owned or operated by the same person as the amount due from that person. A taxpayer

must file a return and pay tax in accordance with the Secretary's direction.

(f) Information on Return. – The amount of tax due and any other information required

by the Secretary must be included on the return. Returns that do not contain the required

information will not be accepted. When an unacceptable return is submitted, the Secretary will

require a corrected return to be filed. The return must contain the following information

concerning energy minerals produced during the month being reported:

(1) The gross amount of energy minerals produced that are subject to the tax

imposed by this Article.

(2) The leases from which the energy minerals were produced.

(3) The names and addresses of the first purchasers of the energy minerals.

(g) Additional Information. – To claim an exemption for on-site use, the producer or

taxpayer of a proposed or existing gas well shall apply to the Secretary for determination of

eligibility. The Secretary may require an applicant to provide any information required to

administer this provision. The Secretary shall make the determination within 15 calendar days of

the receipt of all information required by the Secretary from the producer or taxpayer, and the

producer or taxpayer shall attach the determination of eligibility to its severance tax form next

due, as applicable. The taxpayer shall provide any information required by the Secretary. Every

taxpayer claiming the exemption shall maintain and make available for inspection by the

Secretary of Revenue any records the Secretary considers necessary to determine and verify the

claim to which the taxpayer is entitled. The burden of proving eligibility shall rest upon the

taxpayer, and no exemption shall be allowed to a taxpayer who fails to maintain adequate records

or to make them available for inspection. The portion of the severance tax that is required to be

deducted from the royalty owner or other interest shall be calculated in the same manner as the

portion of the severance tax borne by the producer.

(h) Commission Determination. – To claim the marginal gas rate, the producer or

taxpayer of a proposed or existing gas well shall provide to the Secretary proof that the Mining

and Energy Commission has determined the well qualifies as a marginal gas well. (2014-4, s.

17(a).)

§ 105-187.81. (Effective July 1, 2015) Bond or letter of credit required.

A producer must file with the Secretary a bond or an irrevocable letter of credit if the

producer fails to file a return required under this Article. A bond or an irrevocable letter of credit

must be conditioned upon compliance with the requirements of this Article, be payable to the

State, and be in the form required by the Secretary. The amount of the bond or irrevocable letter

of credit is two times the applicant's average expected monthly tax liability under this Article, as

determined by the Secretary. When notified to do so by the Secretary, a person who is required

to file a bond or an irrevocable letter of credit must file the bond or irrevocable letter of credit in

the amount required by the Secretary within 30 days after receiving the notice from the

Secretary. (2014-4, s. 17(a).)

§ 105-187.82. (Effective July 1, 2015) Liability of producer for tax.


The tax imposed by this Article is the primary liability of the producer, except as provided in

this section. A first purchaser may not take delivery of energy minerals from a producer unless

the producer furnishes the purchaser with a taxpayer identification number assigned by the

Secretary. A first purchaser failing to secure the producer's taxpayer number, either from the

producer or the Secretary, will be liable for any tax, penalty, and interest due on the energy

minerals purchased from the producer. (2014-4, s. 17(a).)

§ 105-187.83. (Effective July 1, 2015) Royalty owner's records.

The owner of a royalty interest shall keep and provide to the Secretary, upon request, both of

the following:

(1) A record of all money received as royalty from each producing leasehold in

the State.

(2) A copy of all settlement sheets furnished by a purchaser or operator or other

statement showing the amount of energy minerals for which a royalty was

received and the amount of severance tax deducted. (2014-4, s. 17(a).)

§ 105-187.84. Permits suspended for failure to report.

If an entity fails to file any report or return or to pay any tax or fee required by this Article

for 90 days after it is due, the Secretary shall inform the Secretary of Environmental Quality of

this failure. The Secretary of Environmental Quality shall suspend permits for oil and gas

exploration using horizontal drilling and hydraulic fracturing under G.S. 113-395 of any entity

that fails to file a return under this Article. The Secretary of Environmental Quality shall

immediately notify by mail an entity of a suspension under this section. (2014-4, s. 17(a);

2015-241, s. 14.30(v).)

§ 105-187.85. (Effective July 1, 2015) No local taxation.

A city or county may not impose a franchise, privilege, license, income, or excise tax on the

severing, production, treating, processing, ownership, sale, storage, purchase, marketing, or

transportation on any energy minerals produced in the State, or upon the business of severing,

producing, treating, processing, owning, selling, buying, storing, marketing, or transporting such

energy minerals, or upon the ownership, operation, or maintenance of plants, facilities,

machinery, pipelines, and gathering lines related to the severing, production, treating, processing,

ownership, storage, sale, purchase, marketing, or transportation of energy minerals. This section

does not preclude the taxation of the property in accordance with Article 11 of this Chapter.

(2014-4, s. 17(a).)







Article 6.

Gift Taxes.

§§ 105-188 through 105-197.1: Repealed by Session Laws 2008-107, s. 28.18(a), effective

January 1, 2009.




January 1, 2009.



January 1, 2009.

Article 7.

Schedule H. Intangible Personal Property.

§ 105-198: Repealed by Session Laws 1995, c. 41, s. 1(b).


§§ 105-201 through 105-204: Repealed by Session Laws 1995, c. 41, s. 1(b).








§ 105-213.1: Recodified as § 105-275.2 by Session Laws 1995.



Article 8.

Schedule I. Compensating Use Tax.


Article 8A.

Gross Earnings Taxes on Freight Line Companies in Lieu of Ad Valorem Taxes.

§ 105-228.1. Defining taxes levied and assessed in this Article.

The purpose of this Article is to levy a fair and equal tax under authority of Section 2(2) of

Article V of the North Carolina Constitution and to provide a practical means for ascertaining

and collecting it. The taxes levied and assessed in this Article are on gross earnings, as defined in

the Article, and are in lieu of ad valorem taxes upon the properties of persons taxed in this

Article. (1954, c. 400, s. 8; 1998-98, ss. 64, 109.)

§ 105-228.2. Tax upon freight car line companies.

(a) For purposes of taxation under this section the property of freight line companies as

defined is declared to constitute a special class of property. In lieu of all ad valorem taxes by

either or both the State government and the respective local taxing jurisdictions, a tax upon gross

earnings in the State as elsewhere defined shall be imposed.

(b) Any person or persons, joint-stock association or corporation, wherever organized or

incorporated, engaged in the business of operating cars or engaged in the business of furnishing

or leasing cars not otherwise listed for taxation in this State, for the transportation of freight

(whether such cars be owned by such company or any other person or company), over any

railway or lines, in whole or in part, within this State, such line or lines not being owned, leased

or operated by such company, whether such cars be termed box, flat, coal, ore, tank, stock,

gondola, furniture, or refrigerator car or by some other name, shall be deemed a freight line

company.

(c) For the purposes of taxation under this section all cars used exclusively within the

State, or used partially within and without the State, and a proportionate part of the intangible

values of the business as a going concern, are hereby declared to have situs in this State.

(d) Every freight line company, as hereinbefore defined, shall pay annually a sum in the

nature of a tax at three per centum (3%) upon the total gross earnings received from all sources

by such freight line companies within the State, which shall be in lieu of all ad valorem taxes in

this State of any freight company so paying the same.

(e) The term "gross earnings received from all sources by such freight line companies

within the State" as used in this Article is hereby declared and shall be construed to mean all

earnings from the operation of freight cars within the State for all car movements or business

beginning and ending within the State and a proportion, based upon the proportion of car mileage

within the State to the total car mileage, or earnings on all interstate car movements or business

passing through, or into or out of the State.

(f) Every railroad company using or leasing the cars of any freight line company shall,

upon making payment to such freight line company for the use or lease, after June 30, 1943, of

such cars withhold so much thereof as is designated in this section. On or before March first of

each year such railroad company shall make and file with the Secretary of Revenue a statement


showing the amount of such payment for the next preceding 12-month period ending December

31, and of the amounts so withheld by it, and shall remit to the Secretary of Revenue the amounts

so withheld. If any railroad company shall fail to make such report or fail to remit the amount of

tax herein levied, or shall fail to withhold the part of such payment hereby required to be

withheld, such railroad company shall become liable for the amount of the tax herein levied and

shall not be entitled to deduct from its gross earnings for purposes of taxation the amounts so

paid by it to freight line companies.

It is not the purpose of this subsection to impose an unreasonable burden of accounting on

railroad companies operating in this State, and the Secretary of Revenue is hereby authorized,

upon the application of any railroad company, to approve any method of accounting which he

finds to be reasonably adequate for determining the amount of mileage earnings by any car line

company whose equipment is operated within the State by or on the lines of such railroad

company. Further, if in the opinion of the Secretary of Revenue the tax imposed by this section

can be satisfactorily collected direct from the freight line companies, he is hereby authorized to

fix rules and regulations for such direct collection, with the authority to return at any time to the

method of collection at source above provided in this subsection.

(g) Every car line company shall file such additional reports annually, and in such form

and as of such date as the Secretary of Revenue may deem necessary to determine the equitable

amount of tax levied under this section.

(h) Upon the filing of such reports it shall be the duty of the Secretary of Revenue to

inspect and verify the same and assess the amount of taxes due from freight line companies

therein named. Any freight line company against which a tax is assessed under the provisions of

this Article may at any time within 15 days after the last day for the filing of reports by railroad

companies, appear before the Secretary of Revenue at a hearing to be granted by the Secretary

and offer evidence and argument on any matter bearing upon the validity or correctness of the

tax assessed against it, and the Secretary shall review his assessment of such tax and shall make

his order confirming or modifying the same as he shall deem just and equitable, and if any

overpayment is found to have been made it shall be refunded by the Secretary. Provided,

however that such payment if in the amount of three dollars ($3.00) or more shall be refunded to

the taxpayer within 60 days of the discovery thereof; if the amount of overpayment is less than

three dollars ($3.00) then such overpayment shall be refunded only upon receipt by the Secretary

of Revenue of a written demand for such refund from the taxpayer. Provided further, that no

overpayment shall be refunded irrespective of whether upon discovery or receipt of written

demand if such discovery is not made or such demand is not received within three years from the

filing date of the return or within six months of the payment of the tax alleged to be an

overpayment, whichever date is the later.

(i) The provisions of Article 9 of this Chapter apply to this Article.

(j) The provisions of this Article shall apply to all freight line gross earnings accruing

from and after June 30, 1943. (1943, c. 400, s. 8; 1957, c. 1340, s. 14; 1973, c. 476, s. 193;

1998-212, s. 29A.14(j).)

Article 8B.

Taxes Upon Insurance Companies.




(1) Article 65 corporation. – A corporation subject to Article 65 of Chapter 58 of

the General Statutes, regulating hospital, medical, and dental service

corporations.

(1a) Captive insurance company. – Defined in G.S. 58-10-340.

(2) Insurer. – An insurer as defined in G.S. 58-1-5 or a group of employers who

have pooled their liabilities pursuant to G.S. 97-93 of the Workers'

Compensation Act.

(3) Self-insurer. – An employer that carries its own risk pursuant to G.S. 97-93 of

the Workers' Compensation Act. (1945, c. 752, s. 2; 1985 (Reg. Sess., 1986),

c. 928, s. 12; 1995, c. 360, s. 1(b); 2013-116, s. 6(a).)

§ 105-228.4: Recodified as § 58-6-7 by Session Laws 1995, c. 360, s. 1(c).

§ 105-228.4A. Tax on captive insurance companies.

(a) Tax Levied. – A tax is levied in this section on a captive insurance company doing

business in this State. In the case of a branch captive insurance company, the tax levied in this

section applies only to the branch business of the company. Two or more captive insurance

companies under common ownership and control are taxed under this section as a single captive

insurance company.

(b) Other Taxes. – A captive insurance company that is subject to the tax levied by this

section is not subject to any of the following:

(1) Franchise taxes imposed by Article 3 of this Chapter.

(2) Income taxes imposed by Article 4 of this Chapter.

(3) Local privilege taxes or local taxes computed on the basis of gross premiums.

(4) The insurance regulatory charge imposed by G.S. 58-6-25.

(c) Administration. – The definitions in G.S. 58-10-340 apply in this section. A company

subject to this section must file with the Secretary a full and accurate report of the premiums

contracted for or collected on policies or contracts of insurance written by the company during

the preceding calendar year. In the case of a multiyear policy or contract, the premiums must be

prorated among the years covered by the policy or contract. The report is due on or before March

15. The taxes imposed by this section are due to the Secretary with the report.

(d) Tax on Assumed Reinsurance Premiums. – The tax to be applied to assumed

reinsurance premiums is computed at the percentages provided in the table below. The tax does

not apply to premiums for risks or portions of risks that are subject to taxation on a direct basis

under subsection (e) of this section. The tax is not payable in connection with the receipt of

assets in exchange for the assumption of loss reserves and other liabilities of one insurer by

another insurer if the two insurers are under common control and the Commissioner of Insurance

verifies both of the following: (i) the transaction between the insurers is part of a plan to

discontinue the operations of one of the insurers, and (ii) the intent of the insurers is to renew or

maintain business with the captive insurance company.

Premiums Collected Rate of Tax

Up to $20,000,000 .225%

$20,000,000 to $40,000,000 .150%

$40,000,000 to $60,000,000 .050%

$60,000,000 and over .025%


(e) Tax on Direct Premiums. – The tax to be applied to direct premiums is computed at

the percentages provided in the table below. In determining the amount of premiums subject to

tax under this subsection, the taxpayer may deduct the amounts paid to policyholders as return

premiums. Return premiums include dividends on unabsorbed premiums or premium deposits

returned or credited to policyholders.

Premiums Collected Rate of Tax

Up to $20,000,000 0.4%

$20,000,000 and more 0.3%

(f) Total Tax Liability. – The aggregate amount of tax payable under this section by a

protected cell captive insurance company with more than 10 cells may not be less than ten

thousand dollars ($10,000) and may not exceed the lesser of (i) one hundred thousand dollars

($100,000) plus five thousand dollars ($5,000) multiplied by the number of cells over 10 and (ii)

two hundred thousand dollars ($200,000). The aggregate amount of tax payable under this

section for any other captive insurance company may not be less than five thousand dollars

($5,000) and may not exceed one hundred thousand dollars ($100,000).

If a captive insurance company is a special purpose financial captive and if the special

purpose financial captive is under common ownership and control with one or more other captive

insurance companies, the following provisions apply to the consolidated group of companies that

are taxed as a single captive insurance company pursuant to subsection (a) of this section:

(1) The amount of premium tax payable under this section is allocated to each

member of the consolidated group in the same proportion that the premium

allocable to the member bears to the total premium of all members.

(2) The aggregate amount of tax payable under this section by the consolidated

group is equal to the greater of the following:

a. The sum of the premium tax allocated to the members.

b. Five thousand dollars ($5,000).

(3) If the total premium tax allocated to all members of a consolidated group that

are special purpose financial captives exceeds one hundred thousand dollars

($100,000), then the total premium tax allocated to those members is one

hundred thousand dollars ($100,000).

(4) If the total premium tax allocated to all members of the consolidated group

that are not special purpose financial captives exceeds one hundred thousand

dollars ($100,000), then the total premium tax allocated to those members is

one hundred thousand dollars ($100,000). (2013-116, s. 6(b); 2014-3, s.

14.11.)

§ 105-228.5. Taxes measured by gross premiums.

(a) Tax Levied. – A tax is levied in this section on insurers, Article 65 corporations,

health maintenance organizations, and self-insurers. An insurer, health maintenance

organization, or Article 65 corporation that is subject to the tax levied by this section is not

subject to franchise or income taxes imposed by Articles 3 and 4, respectively, of this Chapter.

(b) Tax Base. –

(1) Insurers. – The tax imposed by this section on an insurer or a health

maintenance organization shall be measured by gross premiums from business

done in this State during the preceding calendar year.


(2) Repealed by Session Laws 2006-196, effective for taxable years beginning on


(3) Article 65 Corporations. – The tax imposed by this section on an Article 65

corporation shall be measured by gross collections from membership dues,

exclusive of receipts from cost plus plans, received by the corporation during

the preceding calendar year.

(4) Self-insurers. – The tax imposed by this section on a self-insurer shall be

measured by the gross premiums that would be charged against the same or

most similar industry or business, taken from the manual insurance rate then

in force in this State, applied to the self-insurer's payroll for the previous

calendar year as determined under Article 2 of Chapter 97 of the General

Statutes modified by the self-insurer's approved experience modifier.

(b1) Calculation of Tax Base. – In determining the amount of gross premiums from

business in this State, all gross premiums received in this State, credited to policies written or

procured in this State, or derived from business written in this State shall be deemed to be for

contracts covering persons, property, or risks resident or located in this State unless one of the

following applies:

(1) The premiums are properly reported and properly allocated as being received

from business done in some other nation, territory, state, or states.

(2) The premiums are from policies written in federal areas for persons in military

service who pay premiums by assignment of service pay.

Gross premiums from business done in this State in the case of life insurance contracts,

including supplemental contracts providing for disability benefits, accidental death benefits, or

other special benefits that are not annuities, means all premiums collected in the calendar year,

other than for contracts of reinsurance, for policies the premiums on which are paid by or

credited to persons, firms, or corporations resident in this State, or in the case of group policies,

for contracts of insurance covering persons resident within this State. The only deductions

allowed shall be for premiums refunded on policies rescinded for fraud or other breach of

contract and premiums that were paid in advance on life insurance contracts and subsequently

refunded to the insured, premium payer, beneficiary or estate. Gross premiums shall be deemed

to have been collected for the amounts as provided in the policy contracts for the time in force

during the year, whether satisfied by cash payment, notes, loans, automatic premium loans,

applied dividend, or by any other means except waiver of premiums by companies under a

contract for waiver of premium in case of disability.

Gross premiums from business done in this State for all other health care plans and contracts

of insurance, including contracts of insurance required to be carried by the Workers'

Compensation Act, means all premiums written during the calendar year, or the equivalent

thereof in the case of self-insurers under the Workers' Compensation Act, for contracts covering

property or risks in this State, other than for contracts of reinsurance, whether the premiums are

designated as premiums, deposits, premium deposits, policy fees, membership fees, or

assessments. Gross premiums shall be deemed to have been written for the amounts as provided

in the policy contracts, new and renewal, becoming effective during the year irrespective of the

time or method of making payment or settlement for the premiums, and with no deduction for

dividends whether returned in cash or allowed in payment or reduction of premiums or for

additional insurance, and without any other deduction except for return of premiums, deposits,

fees, or assessments for adjustment of policy rates or for cancellation or surrender of policies.


(c) Exclusions. – Every insurer, in computing the premium tax, shall exclude all of the

following from the gross amount of premiums, and the gross amount of excluded premiums is

exempt from the tax imposed by this section:

(1) All premiums received on or after July 1, 1973, from policies or contracts

issued in connection with the funding of a pension, annuity, or profit-sharing

plan qualified or exempt under section 401, 403, 404, 408, 457 or 501 of the

Code as defined in G.S. 105-228.90.

(2) Premiums or considerations received from annuities, as defined in G.S.

58-7-15.

(3) Funds or considerations received in connection with funding agreements, as

defined in G.S. 58-7-16.

(4) The following premiums, to the extent federal law prohibits their taxation

under this Article:

a. Federal Employees Health Benefits Plan premiums.

b. Medicaid or Medicare premiums.

(d) (See Editor's note) Tax Rates; Disposition. –

(1) Workers' Compensation. – The tax rate to be applied to gross premiums, or

the equivalent thereof in the case of self-insurers, on contracts applicable to

liabilities under the Workers' Compensation Act is two and five-tenths percent

(2.5%). The net proceeds shall be credited to the General Fund.

(2) Other Insurance Contracts. – The tax rate to be applied to gross premiums on

all other taxable contracts issued by insurers or health maintenance

organizations and to be applied to gross premiums and gross collections from

membership dues, exclusive of receipts from cost plus plans, received by

Article 65 corporations is one and nine-tenths percent (1.9%). The net

proceeds shall be credited to the General Fund.

(3) Additional Rate on Property Coverage Contracts. – An additional tax at the

rate of seventy-four hundredths percent (0.74%) applies to gross premiums on

insurance contracts for property coverage. The tax is imposed on ten percent

(10%) of the gross premiums from insurance contracts for automobile

physical damage coverage and on one hundred percent (100%) of the gross

premiums from all other contracts for property coverage. Twenty percent

(20%) of the net proceeds of this additional tax must be credited to the

Volunteer Fire Department Fund established in Article 87 of Chapter 58 of the

General Statutes. Twenty percent (20%) of the net proceeds must be credited

to the Department of Insurance for disbursement pursuant to G.S. 58-84-25.

Up to twenty percent (20%), as determined in accordance with G.S.

58-87-10(f), must be credited to the Workers' Compensation Fund. The

remaining net proceeds must be credited to the General Fund.

The following definitions apply in this subdivision:

a. Automobile physical damage. – The following lines of business

identified by the NAIC: private passenger automobile physical damage

and commercial automobile physical damage.

b. Property coverage. – The following lines of business identified by the

NAIC: fire, farm owners multiple peril, homeowners multiple peril,

nonliability portion of commercial multiple peril, ocean marine, inland


marine, earthquake, private passenger automobile physical damage,

commercial automobile physical damage, aircraft, and boiler and

machinery. The term also includes insurance contracts for wind

damage.

c. NAIC. – National Association of Insurance Commissioners.

(4) Repealed by Session Laws 2006-196, effective for taxable years beginning on


(5) Repealed by Session Laws 2003-284, s. 43.1, effective for taxable years


(6) Repealed by Session Laws 2005-276, s. 38.4(a), effective for taxable years


(e) Report and Payment. – Each taxpayer doing business in this State shall, within the

first 15 days of March, file with the Secretary of Revenue a full and accurate report of the total

gross premiums as defined in this section, the payroll and other information required by the

Secretary in the case of a self-insurer, or the total gross collections from membership dues

exclusive of receipts from cost plus plans collected in this State during the preceding calendar

year. The taxes imposed by this section shall be remitted to the Secretary with the report.

(f) Installment Payments Required. – Taxpayers that are subject to the tax imposed by

this section and have a premium tax liability of ten thousand dollars ($10,000) or more for

business done in North Carolina during the immediately preceding year shall remit three equal

quarterly installments with each installment equal to at least thirty-three and one-third percent

(33 1/3%) of the premium tax liability incurred in the immediately preceding taxable year. The

quarterly installment payments shall be made on or before April 15, June 15, and October 15 of

each taxable year. The company shall remit the balance by the following March 15 in the same

manner provided in this section for annual returns.

The Secretary may permit an insurance company to pay less than the required estimated

payment when the insurer reasonably believes that the total estimated payments made for the

current year will exceed the total anticipated tax liability for the year.

An underpayment or an overpayment of an installment payment required by this subsection

accrues interest in accordance with G.S. 105-241.21. An overpayment of tax shall be credited to

the company and applied against the taxes imposed upon the company under this Article.

(g) Exemptions. – This section does not apply to farmers' mutual assessment fire

insurance companies or to fraternal orders or societies that do not operate for a profit and do not

issue policies on any person except members. This section does not apply to a captive insurance

company taxed under G.S. 105-228.4A. (1945, c. 752, s. 2; 1947, c. 501, s. 8; 1951, c. 643, s. 8;

1955, c. 1313, s. 5; 1957, c. 1340, s. 12; 1959, c. 1211; 1961, c. 783; 1963, c. 1096; 1969, c.

1221; 1973, cc. 142, 1019; 1975, c. 143; c. 559, s. 8; 1979, c. 714, s. 2; 1983, c. 713, s. 81; 1985,

c. 119, s. 3; c. 719, ss. 1, 2; 1985 (Reg. Sess., 1986), c. 1031, ss. 1-5; 1987, c. 709, s. 2; c. 814, s.

2; 1989 (Reg. Sess., 1990), c. 814, s. 27; 1991, c. 689, s. 297; 1993 (Reg. Sess., 1994), c. 600, s.

4; 1995, c. 360, s. 1(d); 1995 (Reg. Sess., 1996), c. 747, s. 2; 1998-98, s. 17; 2001-424, s.

34.22(a), (d), (e); 2001-487, s. 69(a); 2001-489, s. 2(a)-(d), (f), (g); 2003-284, s. 43.1; 2005-276,

s. 38.4(a); 2005-435, s. 57(a); 2006-196, ss. 1-5; 2007-250, s. 1; 2007-491, s. 23; 2013-116, s.

6(c); 2013-360, s. 20.2(a); 2014-64, s. 3(b).)

§ 105-228.5A. Credit against gross premium tax for assessments paid to the Insurance

Guaranty Association and the Life and Health Insurance Guaranty Association.


(a) The following definitions apply in this section:

(1) Assessment. – An assessment as described in G.S. 58-48-35 or an assessment

as described in G.S. 58-62-41.

(2) Association. – The North Carolina Insurance Guaranty Association created

under G.S. 58-48-25 or the North Carolina Life and Health Insurance

Guaranty Association created under G.S. 58-62-26.

(3) Repealed by Session Laws 1995, c. 360, s. 1(e).

(4) Member insurer. – A member insurer as defined in G.S. 58-48-20 or a

member insurer as defined in G.S. 58-62-16.

(b) A member insurer who pays an assessment is allowed as a credit against the tax

imposed under G.S. 105-228.5 an amount equal to twenty percent (20%) of the amount of the

assessment in each of the five taxable years following the year in which the assessment was paid.

In the event a member insurer ceases doing business, all assessments for which it has not taken a

credit under this section may be credited against its premium tax liability for the year in which it

ceases doing business. The amount of the credit allowed by this section may not exceed the

member insurer's premium tax liability for the taxable year.

(c) Any sums that are acquired by refund, under either G.S. 58-48-35 or G.S. 58-62-41,

from the Association by member insurers, and that have previously been offset against premium

taxes as provided in subsection (b) of this section, shall be paid by the member insurers to this

State in the manner required by the Secretary of Revenue. The Association shall notify the

Secretary that the refunds have been made. (1991, c. 689, s. 298; 1991 (Reg. Sess., 1992), c.

1007, s. 8; 1995, c. 360, s. 1(e).)

§ 105-228.5B. Distribution of part of tax proceeds to High Risk Pool.

By November 1 of each year, the State Treasurer must transfer from the General Fund to the

North Carolina Health Insurance Risk Pool Fund established in G.S. 58-50-225 an amount equal

to thirty percent (30%) of the growth in revenue from the tax applied to gross premiums under

G.S. 105-228.5(d)(2). The growth in revenue from this tax is the difference between the amount

of revenue collected during the preceding fiscal year on premiums taxed under that subdivision

less $475,545,413, which is the amount of revenue collected during fiscal year 2006-2007 on

premiums taxed under that subdivision. The Treasurer must draw the amount required under this

section from revenue collected on premiums taxed under that subdivision. (2007-532, s. 4(a),

(b); 2008-118, s. 3.2(d), (e); 2009-445, s. 10.)

§ 105-228.6. Taxes in case of withdrawal from State.

Any insurance company which for any cause withdraws from this State or ceases to register

and transact new business in this State shall be liable for the taxes specified in G.S. 105-228.5

with respect to gross premiums collected in the calendar year in which such withdrawal may

occur. In case any company which was formerly licensed or registered in this State and which

subsequently ceased to do business therein, may apply to reenter this State, application for

reentry or renewal of registration shall be denied unless and until said company shall have paid

all taxes, together with any penalties and interest, due as to premiums collected in the year of

withdrawal and also taxes as specified in G.S. 105-228.5 for gross premiums collected in the

calendar year next preceding the year in which such application for renewal of registration is

made. (1945, c. 752, s. 2; 1985 (Reg. Sess., 1986), c. 1031, s. 5.1; 1987, c. 814, s. 4; 1989, c.

346, s. 1.)



§ 105-228.8. Retaliatory premium taxes.

(a) When the laws of any other state impose, or would impose, any premium taxes, upon

North Carolina companies doing business in the other state that are, on an aggregate basis, in

excess of the premium taxes directly imposed upon similar companies by the statutes of this

State, the Secretary of Revenue shall impose the same premium taxes, on an aggregate basis,

upon the companies chartered in the other state doing business or seeking to do business in North

Carolina. Any company subject to the retaliatory tax imposed by this section shall report and pay

the tax with the annual premium tax return required by G.S. 105-228.5. The retaliatory tax

imposed by this section shall be included in the quarterly prepayment rules for premium taxes.

(b) For purposes of this section, the following definitions shall be applied:

(1) "State" includes the District of Columbia and other states, territories, and

possessions of the United States, the provinces of Canada, and other nations.

(2) "Companies" includes all entities subject to tax under G.S. 105-228.5.

(c) For purposes of this section, any premium taxes that are, or would be, imposed upon

North Carolina companies by any city, county, or other political subdivision or agency of another

state shall be deemed to be imposed directly by that state.

(d) In computing the premium taxes that another state imposes, or would impose, upon a

North Carolina company doing business in the state, it shall be assumed that North Carolina

companies pay the highest rates of premium tax that are generally imposed by the other state on

similar companies chartered outside of the state.

(e) This section shall not apply to special purpose obligations or assessments based on

premiums imposed in connection with particular kinds of insurance, to the special purpose

regulatory charge imposed under G.S. 58-6-25, or to dedicated special purpose taxes based on

premiums.

(f) If the laws of another state retaliate against North Carolina companies on other than

an aggregate basis, the Secretary of Revenue shall retaliate against companies chartered in that

state on the same basis. (1945, c. 752, s. 2; 1987, c. 814, s. 1; 1989 (Reg. Sess., 1990), c. 1069,

s. 21; 1991, c. 689, s. 291; 1995, c. 360, s. 1(f); 2011-330, s. 10.)

§ 105-228.9. Commissioner of Insurance to administer portions of Article.

The following taxes relating to insurance are collected by the Commissioner of Insurance:

(1) Surplus lines tax, G.S. 58-21-85.

(2) Tax on risk retention groups not chartered in this State, G.S. 58-22-20(3).

(3) Tax on person procuring insurance directly with an unlicensed insurer, G.S.

58-28-5(b).

The Commissioner of Insurance has the same authority and responsibility in administering those

taxes as the Secretary of Revenue has in administering this Article. (1945, c. 752, s. 2; 1955, c.

1350, s. 22; 1973, c. 476, s. 193; 1987, c. 804, s. 9; 1995, c. 360, s. 1(a); 1995 (Reg. Sess., 1996),

c. 747, s. 1.)

§ 105-228.10. No additional local taxes.

No city or county may levy on a person subject to the tax levied in this Article a privilege tax

or a tax computed on the basis of gross premiums. (1945, c. 752, s. 2; 1998-98, s. 18.)


Article 8C.

Excise Tax on Banks.

§§105-228.11 through 105-228.20. Repealed by Session Laws 1973, c. 1053, s. 1.

§ 105-228.21: Omitted.

Article 8D.

Taxation of Savings and Loan Associations.

§§ 105-228.22 through 105-228.24: Repealed by Session Laws 1998-98, s. 1(a).

§ 105-228.24A: Recodified as § 105-130.43 by Session Laws 1998-98, s. 1(d).


Article 8E.

Excise Tax on Conveyances.

§ 105-228.28. Scope.

This Article applies to every person conveying an interest in real estate located in North

Carolina other than a governmental unit or an instrumentality of a governmental unit. (1967, c.

986, s. 1; 1999-28, s. 1.)


This Article does not apply to any of the following transfers of an interest in real property:

(1) By operation of law.

(2) By lease for a term of years.

(3) By or pursuant to the provisions of a will.

(4) By intestacy.

(5) By gift.

(6) If no consideration in property or money is due or paid by the transferee to the

transferor.

(7) By merger, conversion, or consolidation.

(8) By an instrument securing indebtedness. (1967, c. 986, s. 1; 1999-28, s. 1;

1999-369, s. 5.10(a)-(c).)

§ 105-228.30. Imposition of excise tax; distribution of proceeds.

(a) An excise tax is levied on each instrument by which any interest in real property is

conveyed to another person. The tax rate is one dollar ($1.00) on each five hundred dollars

($500.00) or fractional part thereof of the consideration or value of the interest conveyed. The

transferor must pay the tax to the register of deeds of the county in which the real estate is

located before recording the instrument of conveyance. If the instrument transfers a parcel of real


estate lying in two or more counties, however, the tax must be paid to the register of deeds of the

county in which the greater part of the real estate with respect to value lies.

The excise tax on instruments imposed by this Article applies to timber deeds and contracts

for the sale of standing timber to the same extent as if these deeds and contracts conveyed an

interest in real property.

(b) The register of deeds of each county must remit the proceeds of the tax levied by this

section to the county finance officer. The finance officer of each county must credit one-half of

the proceeds to the county's general fund and remit the remaining one-half of the proceeds, less

taxes refunded and the county's allowance for administrative expenses, to the Department of

Revenue on a monthly basis. A county may retain two percent (2%) of the amount of tax

proceeds allocated for remittance to the Department of Revenue as compensation for the county's

cost in collecting and remitting the State's share of the tax. The Department of Revenue shall

credit the funds remitted to the Department of Revenue under this subsection to the General

Fund. (1967, c. 986, s. 1; 1991, c. 689, s. 338; 1991 (Reg. Sess., 1992), c. 1019, s. 1; 1993 (Reg.

Sess., 1994), c. 772, s. 2; 1995, c. 456, s. 3; 1999-28, s. 1; 2000-16, s. 1; 2001-427, s. 14(a);

2011-330, s. 30(b); 2013-360, s. 14.4(a).)


§ 105-228.32. Instrument must be marked to reflect tax paid.

A person who presents an instrument for registration must report to the Register of Deeds the

amount of tax due. It is the duty of the person presenting the instrument for registration to report

the correct amount of tax due. Before the instrument may be recorded, the Register of Deeds

must collect the tax due and mark the instrument to indicate that the tax has been paid and the

amount of the tax paid. (1967, c. 986, s. 1; 1969, c. 599, s. 1; 1973, c. 476, s. 193; 1999-28, s. 1;

2009-454, s. 2.)

§ 105-228.33. Taxes recoverable by action.

A county may recover unpaid taxes under this Article in an action in the name of the county

brought in the superior court of the county. The action may be filed if the taxes remain unpaid

more than 30 days after the register of deeds has demanded payment. In such actions, costs of

court shall include a fee to the county of twenty-five dollars ($25.00) for expense of collection.

(1967, c. 986, s. 1; 1999-28, s. 1.)


§ 105-228.35. Administrative provisions.

Except as otherwise provided in this Article, the provisions of Article 9 of this Chapter apply

to this Article. (1967, c. 986, s. 1; 1999-28, s. 1; 2000-170, s. 1.)


§ 105-228.37. Refund of overpayment of tax.

(a) Refund Request. – A taxpayer who pays more tax than is due under this Article may

request a refund of the overpayment by filing a written request for a refund with the board of

county commissioners of the county where the tax was paid. The request must be filed within six


months after the date the tax was paid and must explain why the taxpayer believes a refund is

due.

(b) Hearing by County. – A board of county commissioners must conduct a hearing on a

request for refund. Within 60 days after a timely request for a refund has been filed and at least

10 days before the date set for the hearing, the board must notify the taxpayer in writing of the

time and place at which the hearing will be conducted. The date set for the hearing must be

within 90 days after the timely request for a hearing was filed or at a later date mutually agreed

upon by the taxpayer and the board. The board must make a decision on the requested refund

within 90 days after conducting a hearing under this subsection.

(c) Process if Refund Granted. – If the board of commissioners decides that a refund is

due, it must refund the overpayment, together with any applicable interest, to the taxpayer and

inform the Department of the refund. The Department may assess the taxpayer for the amount of

the refund in accordance with G.S. 105-241.9 if the Department disagrees with the board's

decision.

(d) Process if Refund Denied. – If the board of commissioners finds that no refund is due,

the written decision of the board must inform the taxpayer that the taxpayer may request a

departmental review of the denial of the refund in accordance with the procedures set out in G.S.

105-241.11.

(e) Recording Correct Deed. – Before a tax is refunded, the taxpayer must record a new

instrument reflecting the correct amount of tax due. If no tax is due because an instrument was

recorded in the wrong county, then the taxpayer must record a document stating that no tax was

owed because the instrument being corrected was recorded in the wrong county. The taxpayer

must include in the document the names of the grantors and grantees and the deed book and page

number of the instrument being corrected.

When a taxpayer records a corrected instrument, the taxpayer must inform the register of

deeds that the instrument being recorded is a correcting instrument. The taxpayer must give the

register of deeds a copy of the decision granting the refund that shows the correct amount of tax

due. The correcting instrument must include the deed book and page number of the instrument

being corrected. The register of deeds must notify the county finance officer and the Secretary

when the correcting instrument has been recorded.

(f) Interest. – An overpayment of tax bears interest at the rate established in G.S.

105-241.21 from the date that interest begins to accrue. Interest begins to accrue on an

overpayment 30 days after the request for a refund is filed by the taxpayer with the board of

county commissioners. (2000-170, s. 2; 2007-491, s. 24; 2011-330, s. 30(a).)


Article 9.

General Administration; Penalties and Remedies.

§ 105-228.90. Scope and definitions.

(a) Scope. – This Article applies to all of the following:

(1) Subchapters I, V, and VIII of this Chapter.

(2) The annual report filing requirements of G.S. 55-16-22.

(3) The primary forest product assessment levied under Article 81 of Chapter 106



(4) The inspection taxes levied under Article 3 of Chapter 119 of the General

Statutes.

(5) Chapter 105A of the General Statutes.

(b) Definitions. – The following definitions apply in this Article:

(1) Charter school. – A nonprofit corporation that has a charter under G.S.

115C-218.5 to operate a charter school.

(1a) City. – A city as defined by G.S. 160A-1(2). The term also includes an urban

service district defined by the governing board of a consolidated city-county,

as defined by G.S. 160B-2(1).

(1b) Code. – The Internal Revenue Code as enacted as of January 1, 2015,

including any provisions enacted as of that date that become effective either

before or after that date.

(1c) County. – Any one of the counties listed in G.S. 153A-10. The term also

includes a consolidated city-county as defined by G.S. 160B-2(1).


(3) Electronic Funds Transfer. – A transfer of funds initiated by using an

electronic terminal, a telephone, a computer, or magnetic tape to instruct or

authorize a financial institution or its agent to credit or debit an account.

(4) Income tax return preparer. – Any person who prepares for compensation, or

who employs one or more persons to prepare for compensation, any return of

tax imposed by Article 4 of this Chapter or any claim for refund of tax

imposed by Article 4 of this Chapter. For purposes of this definition, the

completion of a substantial portion of a return or claim for refund is treated as

the preparation of the return or claim for refund. The term does not include a

person merely because the person (i) furnishes typing, reproducing, or other

mechanical assistance, (ii) prepares a return or claim for refund of the

employer, or an officer or employee of the employer, by whom the person is

regularly and continuously employed, (iii) prepares as a fiduciary a return or

claim for refund for any person, or (iv) represents a taxpayer in a hearing

regarding a proposed assessment.

(4b) NAICS. – The North American Industry Classification System adopted by the

United States Office of Management and Budget as of December 31, 2007.

(4d) Pass-through entity. – An entity or business, including a limited partnership, a

general partnership, a joint venture, a Subchapter S Corporation, or a limited

liability company, all of which is treated as owned by individuals or other

entities under the federal tax laws, in which the owners report their share of

the income, losses, and credits from the entity or business on their income tax

returns filed with this State. For the purpose of this section, an owner of a

pass-through entity is an individual or entity who is treated as an owner under

the federal tax laws.

(5) Person. – An individual, a fiduciary, a firm, an association, a partnership, a

limited liability company, a corporation, a unit of government, or another

group acting as a unit. The term includes an officer or employee of a

corporation, a member, a manager, or an employee of a limited liability

company, and a member or employee of a partnership who, as officer,

employee, member, or manager, is under a duty to perform an act in meeting


the requirements of Subchapter I, V, or VIII of this Chapter, of G.S. 55-16-22,

of Article 81 of Chapter 106 of the General Statutes, or of Article 3 of Chapter

119 of the General Statutes.


(7) Tax. – A tax levied under Subchapter I, V, or VIII of this Chapter, the primary

forest product assessment levied under Article 81 of Chapter 106 of the

General Statutes, or an inspection tax levied under Article 3 of Chapter 119 of

the General Statutes. Unless the context clearly requires otherwise, the term

"tax" includes penalties and interest as well as the principal amount.

(8) Taxpayer. – A person subject to the tax or reporting requirements of

Subchapter I, V, or VIII of this Chapter, of Article 81 of Chapter 106 of the

General Statutes, or of Article 3 of Chapter 119 of the General Statutes. (1991

(Reg. Sess., 1992), c. 930, s. 13; 1993, c. 12, s. 1; c. 354, s. 18; c. 450, s. 1;

1993 (Reg. Sess., 1994), c. 662, s. 1; c. 745, s. 13; 1995, c. 17, s. 9; c. 461, s.

14; 1995 (Reg. Sess., 1996), c. 664, s. 1; 1997-55, s. 1; 1997-475, s. 6.9;

1998-171, s. 1; 1999-415, s. 1; 2000-72, s. 1; 2000-126, s. 1; 2000-140, s. 69;

2001-414, s. 23; 2001-427, s. 4(a); 2002-106, s. 1; 2002-126, s. 30C.1(a);

2003-25, s. 1; 2003-284, s. 37A.1; 2003-416, s. 4(d); 2004-110, s. 1.1;

2005-276, ss. 35.1(a), (d); 2006-18, s. 1; 2007-323, s. 31.1(a); 2007-491, s.

25; 2008-107, s. 28.1(a); 2009-451, s. 27A.6(a), (b); 2010-31, s. 31.1(a);

2011-5, s. 1; 2011-145, s. 13.25(xx); 2011-330, ss. 11, 31(a), 37; 2012-79, s.

1.7(a); 2013-10, s. 1; 2014-3, s. 14.16(a); 2014-101, s. 7; 2015-2, s. 1.1.)


§ 105-230. Charter suspended for failure to report.

(a) If a corporation or a limited liability company fails to file any report or return or to

pay any tax or fee required by this Subchapter for 90 days after it is due, the Secretary shall

inform the Secretary of State of this failure. The Secretary of State shall suspend the articles of

incorporation, articles of organization, or certificate of authority, as appropriate, of the

corporation or limited liability company. The Secretary of State shall immediately notify by mail

every domestic or foreign corporation or limited liability company so suspended of its

suspension. The powers, privileges, and franchises conferred upon the corporation or limited

liability company by the articles of incorporation, the articles of organization, or the certificate of

authority terminate upon suspension.

(b) Any act performed or attempted to be performed during the period of suspension is

invalid and of no effect, unless the Secretary of State reinstates the corporation or limited

liability company pursuant to G.S. 105-232. (1939, c. 158, ss. 901, 902; 1957, c. 498; 1967, c.

823, s. 31; 1969, c. 965, s. 2; 1973, c. 476, s. 193; 1987, c. 644, s. 1; 1989 (Reg. Sess., 1990), c.

1024, s. 19(a); 1993, c. 354, ss. 19, 20; 1998-212, s. 29A.14(l); 2001-387, s. 152.)

§ 105-231: Recodified as the second paragraph of § 105-230 by S.L. 1998-212, s. 29A.14(k).

§ 105-232. Rights restored; receivership and liquidation.

(a) Any corporation or limited liability company whose articles of incorporation, articles

of organization, or certificate of authority to do business in this State has been suspended by the


Secretary of State under G.S. 105-230, that complies with all the requirements of this Subchapter

and pays all State taxes, fees, or penalties due from it (which total amount due may be computed,

for years prior and subsequent to the suspension, in the same manner as if the suspension had not

taken place), and pays to the Secretary of Revenue a fee of twenty-five dollars ($25.00) to cover

the cost of reinstatement, is entitled to exercise again its rights, privileges, and franchises in this

State. The Secretary of Revenue shall notify the Secretary of State of this compliance and the

Secretary of State shall reinstate the corporation or limited liability company by appropriate

entry upon the records of the office of the Secretary of State. Upon entry of reinstatement, it

relates back to and takes effect as of the date of the suspension by the Secretary of State and the

corporation or limited liability company resumes carrying on its business as if the suspension had

never occurred, subject to the rights of any person who reasonably relied, to that person's

prejudice, upon the suspension. The Secretary of State shall immediately notify by mail the

corporation or limited liability company of the reinstatement.

(b) When the articles of incorporation, articles of organization, or certificate of authority

to do business in this State has been suspended by the Secretary of State under G.S. 105-230, and

the corporation or limited liability company has ceased to operate as a going concern, if there

remains property held in the name of the corporation or limited liability company or undisposed

of at the time of the suspension, or there remain future interests that may accrue to the

corporation, the limited liability company, or its successors, members, or stockholders, any

interested party may apply to the superior court for the appointment of a receiver. Application for

the receiver may be made in a civil action to which all stockholders, members, or their

representatives or next of kin shall be made parties. Stockholders or members whose

whereabouts are unknown, unknown stockholders or members, unknown heirs and next of kin of

deceased stockholders, members, creditors, dealers, and other interested persons may be served

by publication. A guardian ad litem may be appointed for any stockholders, members, or their

representatives who are infants or incompetent. The receiver shall enter into a bond if the court

requires one and shall give notice to creditors by publication or otherwise as the court may

prescribe. Any creditor who fails to file a claim with the receiver within the time set shall be

barred of the right to participate in the distribution of the assets. The receiver may (i) sell the

property interests of the corporation or limited liability company upon such terms and in such

manner as the court may order, (ii) apply the proceeds to the payment of any debts of the

corporation or limited liability company, and (iii) distribute the remainder among the

stockholders, the members, or their representatives in proportion to their interests in the property

interests. Shares due to any stockholder or member who is unknown or whose whereabouts are

unknown shall be paid into the office of the clerk of the superior court, to be disbursed according

to law. In the event the records of the corporation or limited liability company are lost or do not

reflect the owners of the property interests, the court shall determine the owners from the best

evidence available, and the receiver shall be protected in acting in accordance with the court's

finding. This proceeding is authorized for the sole purpose of providing a procedure for

disposing of the assets of the corporation or limited liability company by the payment of its debts

and by the transfer to its stockholders, its members, or their representatives their proportionate

shares of its assets. (1939, c. 158, s. 903; c. 370, s. 1; 1943, c. 400, s. 9; 1947, c. 501, s. 9; 1951,

c. 29; 1969, c. 541, s. 10; 1973, c. 476, s. 193; c. 1065; 1987, c. 644, s. 2; 1989 (Reg. Sess.,

1990), c. 1024, s. 19(b); 1991, c. 645, s. 21; 1993, c. 354, s. 21; 2001-387, s. 153; 2001-487, s.

62(dd).)


§ 105-233: Repealed by Session Laws 2006-162, s. 12(a), effective July 24, 2006.

§ 105-234: Repealed by Session Laws 2006-162, s. 12(a), effective July 24, 2006.

§ 105-235. Every day's failure a separate offense.

The willful failure, refusal, or neglect to observe and comply with any order, direction, or

mandate of the Secretary of Revenue, or to perform any duty enjoined by this Subchapter, by any

person, firm, or corporation subject to the provisions of this Subchapter, or any officer, agent, or

employee thereof, shall, for each day such failure, refusal, or neglect continues, constitute a

separate and distinct offense. (1939, c. 158, s. 906; 1973, c. 476, s. 193.)

§ 105-236. Penalties; situs of violations; penalty disposition.

(a) Penalties. – The following civil penalties and criminal offenses apply:

(1) Penalty for Bad Checks. – When the bank upon which any uncertified check

tendered to the Department of Revenue in payment of any obligation due to

the Department returns the check because of insufficient funds or the

nonexistence of an account of the drawer, the Secretary shall assess a penalty

equal to ten percent (10%) of the check, subject to a minimum of one dollar

($1.00) and a maximum of one thousand dollars ($1,000). This penalty does

not apply if the Secretary finds that, when the check was presented for

payment, the drawer of the check had sufficient funds in an account at a

financial institution to pay the check and, by inadvertence, the drawer of the

check failed to draw the check on the account that had sufficient funds.

(1a) Penalty for Bad Electronic Funds Transfer. – When an electronic funds

transfer cannot be completed due to insufficient funds or the nonexistence of

an account of the transferor, the Secretary shall assess a penalty equal to ten

percent (10%) of the amount of the transfer, subject to a minimum of one

dollar ($1.00) and a maximum of one thousand dollars ($1,000). This penalty

may be waived by the Secretary in accordance with G.S. 105-237.

(1b) Making Payment in Wrong Form. – For making a payment of tax in a form

other than the form required by the Secretary pursuant to G.S. 105-241(a), the

Secretary shall assess a penalty equal to five percent (5%) of the amount of

the tax, subject to a minimum of one dollar ($1.00) and a maximum of one

thousand dollars ($1,000). This penalty may be waived by the Secretary in

accordance with G.S. 105-237.

(2) Failure to Obtain a License. – For failure to obtain a license before engaging

in a business, trade or profession for which a license is required, the Secretary

shall assess a penalty equal to five percent (5%) of the amount prescribed for

the license per month or fraction thereof until paid, not to exceed twenty-five

percent (25%) of the amount so prescribed, but in any event shall not be less

than five dollars ($5.00). In cases in which the taxpayer, after written

notification by the Department, fails to obtain a license as required under G.S.

105-449.65 or G.S. 105-449.131, the Secretary may assess a penalty of one

thousand dollars ($1,000).

(3) Failure to File Return. – In case of failure to file any return on the date it is

due, determined with regard to any extension of time for filing, the Secretary


shall assess a penalty equal to five percent (5%) of the amount of the tax if the

failure is for not more than one month, with an additional five percent (5%)

for each additional month, or fraction thereof, during which the failure

continues, not exceeding twenty-five percent (25%) in aggregate.

(4) Failure to Pay Tax When Due. – In the case of failure to pay any tax when

due, without intent to evade the tax, the Secretary shall assess a penalty equal

to ten percent (10%) of the tax. This penalty does not apply in any of the


a. When the amount of tax shown as due on an amended return is paid

when the return is filed.

b. When the Secretary proposes an assessment for tax due but not shown

on a return and the tax due is paid within 45 days after the later of the

following:

1. The date of the notice of proposed assessment of the tax, if the

taxpayer does not file a timely request for a Departmental

review of the proposed assessment.

2. The date the proposed assessment becomes collectible under

one of the circumstances listed in G.S. 105-241.22(3) through

(6), if the taxpayer files a timely request for a Departmental

review of the proposed assessment.

c. When a taxpayer timely files a consolidated or combined return at the

request of the Secretary under Part 1 of Article 4 of this Chapter and

the tax due is paid within 45 days after the latest of the following:

1. The date the return is filed.

2. The date of a notice of proposed assessment based on the

return, if the taxpayer does not file a timely request for a

Departmental review of the proposed assessment.

3. The date the Departmental review of the proposed assessment

ends as a result of the occurrence of one of the actions listed in

G.S. 105-241.22(3) through (6), if the taxpayer files a timely

request for a Departmental review.

(5) Negligence. –

a. Finding of negligence. – For negligent failure to comply with any of

the provisions to which this Article applies, or rules issued pursuant

thereto, without intent to defraud, the Secretary shall assess a penalty

equal to ten percent (10%) of the deficiency due to the negligence.

b. Large individual income tax deficiency. – In the case of individual

income tax, if a taxpayer understates taxable income, by any means, by

an amount equal to twenty-five percent (25%) or more of gross

income, the Secretary shall assess a penalty equal to twenty-five

percent (25%) of the deficiency. For purposes of this subdivision,

"gross income" means gross income as defined in section 61 of the

Code.

c. Other large tax deficiency. – In the case of a tax other than individual

income tax, if a taxpayer understates tax liability by twenty-five


percent (25%) or more, the Secretary shall assess a penalty equal to

twenty-five percent (25%) of the deficiency.

d. No double penalty. – If a penalty is assessed under subdivision (6) of

this section, no additional penalty for negligence shall be assessed with

respect to the same deficiency.

e. Repealed by Session Laws 2013-316, s. 7(c), effective January 1,

2013, and applicable to estates of decedents dying on or after that date.

f. Consolidated or combined return. – The amount of tax shown as due

on a consolidated or combined return filed at the request of the

Secretary under Part 1 of Article 4 of this Chapter is not considered a

deficiency and is not subject to this subdivision unless one or more of

the following applies:

1. The return is an amended consolidated or combined return that

includes the same corporations as the initial consolidated or

combined return filed at the request of the Secretary. In this

case the deficiency is the extent to which the amount shown as

due on the amended return exceeds the amount shown as due

on the initial return.

2. Repealed by Session Laws 2011-390, s. 5, effective January 1,

2012.

3. Pursuant to a written request from a taxpayer, the Secretary has

provided written advice to that taxpayer stating that the

Secretary will require a consolidated or combined return under

the facts and circumstances set out in the request, and the

Secretary requires a taxpayer to file a consolidated or

combined return under G.S. 105-130.5A because the taxpayer's

facts and circumstances meet those described in the written

advice.

(5a) Misuse of Exemption Certificate. – For misuse of an exemption certificate by

a purchaser, the Secretary shall assess a penalty equal to two hundred fifty

dollars ($250.00). An exemption certificate is a certificate issued by the

Secretary that authorizes a retailer to sell tangible personal property to the

holder of the certificate and either collect tax at a preferential rate or not

collect tax on the sale. Examples of an exemption certificate include a

certificate of exemption, a direct pay certificate, and a conditional exemption

certificate.

(5b) Road Tax Understatement. – If a motor carrier understates its liability for the

road tax imposed by Article 36B of this Chapter by twenty-five percent (25%)

or more, the Secretary shall assess the motor carrier a penalty in an amount

equal to two times the amount of the deficiency.

(6) Fraud. – If there is a deficiency or delinquency in payment of any tax because

of fraud with intent to evade the tax, the Secretary shall assess a penalty equal

to fifty percent (50%) of the total deficiency.

(7) Attempt to Evade or Defeat Tax. – Any person who willfully attempts, or any

person who aids or abets any person to attempt in any manner to evade or


defeat a tax or its payment, shall, in addition to other penalties provided by

law, be guilty of a Class H felony.

(8) Willful Failure to Collect, Withhold, or Pay Over Tax. – Any person required

to collect, withhold, account for, and pay over any tax who willfully fails to

collect or truthfully account for and pay over the tax shall, in addition to other

penalties provided by law, be guilty of a Class 1 misdemeanor.

Notwithstanding any other provision of law, no prosecution for a violation

brought under this subdivision shall be barred before the expiration of six

years after the date of the violation.

(9) Willful Failure to File Return, Supply Information, or Pay Tax. – Any person

required to pay any tax, to file a return, to keep any records, or to supply any

information, who willfully fails to pay the tax, file the return, keep the

records, or supply the information, at the time or times required by law, or

rules issued pursuant thereto, is, in addition to other penalties provided by

law, guilty of a Class 1 misdemeanor. Notwithstanding any other provision of

law, no prosecution for a violation brought under this subdivision is barred

before the expiration of six years after the date of the violation.

(9a) Aid or Assistance. – Any person, pursuant to or in connection with the

revenue laws, who willfully aids, assists in, procures, counsels, or advises the

preparation, presentation, or filing of a return, affidavit, claim, or any other

document that the person knows is fraudulent or false as to any material

matter, whether or not the falsity or fraud is with the knowledge or consent of

the person authorized or required to present or file the return, affidavit, claim,

or other document, is guilty of a felony as follows:

a. If the person who commits an offense under this subdivision is an

income tax return preparer and the amount of all taxes fraudulently

evaded on returns filed in one taxable year is one hundred thousand

dollars ($100,000) or more, the person is guilty of a Class C felony.

b. If the person who commits an offense under this subdivision is an

income tax return preparer and the amount of all taxes fraudulently

evaded on returns filed in one taxable year is less than one hundred

thousand dollars ($100,000), the person is guilty of a Class F felony.

c. If the person who commits an offense under this subdivision is not

covered under sub-subdivision a. or b. of this subdivision, the person is

guilty of a Class H felony.

(10) Failure to File Informational Returns. –

a. Repealed by Session Laws 1998-212, s. 29A.14(m), effective January

1, 1999.

b. The Secretary may request a person who fails to file timely statements

of payment to another person with respect to wages, dividends, rents,

or interest paid to that person to file the statements by a certain date. If

the payer fails to file the statements by that date, the amounts claimed

on the payer's income tax return as deductions for salaries and wages,

or rents or interest shall be disallowed to the extent that the payer

failed to comply with the Secretary's request with respect to the

statements.


c. (Effective for taxable years beginning before January 1, 2016) For

failure to file an informational return required by Article 36C or 36D

of this Chapter by the date the return is due, there shall be assessed a

penalty of fifty dollars ($50.00).

c. (Effective for taxable years beginning on or after January 1, 2016)

For failure to file with the Secretary an informational return required

by Article 4A, 36C, or 36D of this Chapter by the date the return is

due, there shall be assessed a penalty of fifty dollars ($50.00).

(10a) Filing a Frivolous Return. – If a taxpayer files a frivolous return under Part 2

of Article 4 of this Chapter, the Secretary shall assess a penalty in the amount

of up to five hundred dollars ($500.00). A frivolous return is a return that

meets both of the following requirements:

a. It fails to provide sufficient information to permit a determination that

the return is correct or contains information which positively indicates

the return is incorrect, and

b. It evidences an intention to delay, impede or negate the revenue laws

of this State or purports to adopt a position that is lacking in

seriousness.

(10b) Misrepresentation Concerning Payment. – A person who receives money from

a taxpayer with the understanding that the money is to be remitted to the

Secretary for application to the taxpayer's tax liability and who willfully fails

to remit the money to the Secretary is guilty of a Class F felony.

(11) Repealed by Session Laws 2006-162, s. 12(b), effective July 24, 2006.


(b) Situs. – Violation of a tax law is considered an act committed in part at the office of

the Secretary in Raleigh. The certificate of the Secretary that a tax has not been paid, a return has

not been filed, or information has not been supplied, as required by law, is prima facie evidence

that the tax has not been paid, the return has not been filed, or the information has not been

supplied.

(c) Penalty Disposition. – Civil penalties assessed by the Secretary are assessed as an

additional tax. The clear proceeds of civil penalties assessed by the Secretary must be credited to

the Civil Penalty and Forfeiture Fund established in G.S. 115C-457.1. (1939, c. 158, s. 907;

1953, c. 1302, s. 7; 1959, c. 1259, s. 8; 1963, c. 1169, s. 6; 1967, c. 1110, s. 9; 1973, c. 476, s.

193; c. 1287, s. 13; 1979, c. 156, s. 2; 1985, c. 114, s. 11; 1985 (Reg. Sess., 1986), c. 983; 1987

(Reg. Sess., 1988), c. 1076; 1989, c. 557, ss. 7 to 10; 1989 (Reg. Sess., 1990), c. 1005, s. 9; 1991,

c. 45, s. 27; 1991 (Reg. Sess., 1992), c. 914, s. 2; c. 1007, s. 10; 1993, c. 354, s. 22; c. 450, s. 10;

c. 539, ss. 709, 710, 1292, 1293; 1994, Ex. Sess., c. 24, s. 14(c); 1995, c. 390, s. 36; 1995 (Reg.

Sess., 1996), c. 646, s. 10; c. 647, s. 51; c. 696, s. 1; 1997-6, s. 8; 1997-109, s. 3; 1998-178, ss. 1,

2; 1998-212, s. 29A.14(m); 1999-415, ss. 2, 3; 1999-438, ss. 15, 16; 2000-119, s. 2; 2000-120, s.

7; 2000-140, s. 70; 2002-106, ss. 2, 4; 2005-276, s. 6.37(n); 2005-435, s. 1; 2006-162, s. 12(b);

2007-491, s. 26; 2008-107, s. 28.18(b); 2010-31, s. 31.10(a), (b); 2011-330, s. 32; 2011-390, s. 5;

2011-411, s. 8(b); 2012-79, s. 2.18(a); 2013-316, s. 7(c); 2013-414, s. 1(h); 2014-3, s. 3.1(c);

2015-259, s. 7.1(b).)

§ 105-236.1. Enforcement of revenue laws by revenue law enforcement agents.


(a) General. – The Secretary may appoint employees of the Unauthorized Substances Tax

Section of the Tax Enforcement Division to serve as revenue law enforcement officers having

the responsibility and subject-matter jurisdiction to enforce the excise tax on unauthorized

substances imposed by Article 2D of this Chapter.

The Secretary may appoint up to 11 employees of the Motor Fuels Investigations Section of

the Tax Enforcement Division to serve as revenue law enforcement officers having the

responsibility and subject-matter jurisdiction to enforce the taxes on motor fuels imposed by

Articles 36B, 36C, and 36D of this Chapter and by Chapter 119 of the General Statutes.

The Secretary may appoint employees of the Criminal Investigations Section of the Tax

Enforcement Division to serve as revenue law enforcement officers having the responsibility and

subject-matter jurisdiction to enforce the following tax violations and criminal offenses:

(1) The felony and misdemeanor tax violations in G.S. 105-236.

(2) The misdemeanor tax violations in G.S. 105-449.117 and G.S. 105-449.120.

(3) The following criminal offenses when they involve a tax imposed under

Chapter 105 of the General Statutes:

a. G.S. 14-91 (Embezzlement of State Property).

b. G.S. 14-92 (Embezzlement of Funds).

c. G.S. 14-100 (Obtaining Property By False Pretenses).

c1. G.S. 14-113.20 (Identity Theft).

c2. G.S. 14-113.20A (Trafficking in Stolen Identities).

d. G.S. 14-119 (Forgery).

e. G.S. 14-120 (Uttering Forged Paper).

f. G.S. 14-401.18 (Sale of Certain Packages of Cigarettes).

g. G.S. 14-118.7 (Possession, transfer, or use of automated sales

suppression device).

(b) Authority. – A revenue law enforcement officer is a State officer with jurisdiction

throughout the State within the officer's subject-matter jurisdiction. A revenue law enforcement

officer may serve and execute notices, orders, warrants, or demands issued by the Secretary or

the General Court of Justice in connection with the enforcement of the officer's subject-matter

jurisdiction. A revenue law enforcement officer has the full powers of arrest as provided by G.S.

15A-401 while executing the notices, orders, warrants, or demands.

(c) Qualifications. – To serve as a revenue law enforcement officer, an employee must be

certified as a criminal justice officer under Chapter 17C of the General Statutes. The Secretary

may administer the oath of office to revenue law enforcement officers appointed pursuant to this

section. (1997-503, s. 1; 2000-119, s. 1; 2004-124, s. 23.4; 2013-414, s. 17; 2014-3, s. 14.12.)

§ 105-237. Waiver; installment payments.

(a) Waiver. – The Secretary may, upon making a record of the reasons therefor, do the

following:

(1) Reduce or waive any penalties provided for in this Subchapter.

(2) Reduce or waive any interest provided for in this Subchapter on taxes imposed

prior to or during a period for which a taxpayer has declared bankruptcy under

Chapter 7 or Chapter 13 of Title 11 of the United States Code.

(b) Installment Payments. – After a proposed assessment of a tax becomes final, the

Secretary may enter into an agreement with the taxpayer for payment of the tax in installments if

the Secretary determines that the agreement will facilitate collection of the tax. The agreement


may include a waiver of penalties but may not include a waiver of liability for tax or interest due.

The Secretary may modify or terminate the agreement if one or more of the following findings is

made:

(1) Information provided by the taxpayer in support of the agreement was

inaccurate or incomplete.

(2) Collection of tax to which the agreement applies is in jeopardy.

(3) The taxpayer's financial condition has changed.

(4) The taxpayer has failed to pay an installment when due or to pay another tax

when due.

(5) The taxpayer has failed to provide information requested by the Secretary.

The Secretary must give a taxpayer who has entered into an installment agreement at least 30

days' written notice before modifying or terminating the agreement on the grounds that the

taxpayer's financial condition has changed unless the taxpayer failed to disclose or concealed

assets or income when the agreement was made or the taxpayer has acquired assets since the

agreement was made that can satisfy all or part of the tax liability. A notice must specify the

basis for the Secretary's finding of a change in the taxpayer's financial condition. (1939, c. 158,

s. 908; c. 370, s. 1; 1973, c. 476, s. 193; 1993, c. 532, s. 1; 1999-438, s. 17; 2015-259, s. 7.2.)

§ 105-237.1. Compromise of liability.

(a) Authority. – The Secretary may compromise a taxpayer's liability for a tax that is

collectible under G.S. 105-241.22 when the Secretary determines that the compromise is in the

best interest of the State and makes one or more of the following findings:

(1) There is a reasonable doubt as to the amount of the liability of the taxpayer

under the law and the facts.

(2) The taxpayer is insolvent and the Secretary probably could not otherwise

collect an amount equal to or in excess of the amount offered in compromise.

A taxpayer is considered insolvent only in one of the following circumstances:

a. It is plain and indisputable that the taxpayer is clearly insolvent and

will remain so in the reasonable future.

b. The taxpayer has been determined to be insolvent in a judicial

proceeding.

(3) Collection of a greater amount than that offered in compromise is improbable,

and the funds or a substantial portion of the funds offered in the settlement

come from sources from which the Secretary could not otherwise collect.

(4) A federal tax assessment arising out of the same facts has been compromised

with the federal government on the same or a similar basis as that proposed to

the State and the Secretary could probably not collect an amount equal to or in

excess of that offered in compromise.

(5) Collection of a greater amount than that offered in compromise would

produce an unjust result under the circumstances.

(6) (Effective until March 1, 2016) The taxpayer is a retailer or a person under

Article 5 of this Chapter; the assessment is for sales or use tax the retailer

failed to collect or the person failed to pay on an item taxable under G.S.

105-164.4(a)(10) and (a)(11), and the retailer or person made a good-faith

effort to comply with the sales and use tax laws. This subdivision expires for

assessments issued after July 1, 2020.


(6) (Effective March 1, 2016) The taxpayer is a retailer or a person under Article

5 of this Chapter; the assessment is for sales or use tax the retailer failed to

collect or the person failed to pay on an item taxable under G.S.

105-164.4(a)(10) through (a)(15), and the retailer or person made a good-faith

effort to comply with the sales and use tax laws. This subdivision expires for

assessments issued after July 1, 2020.

(b) Written Statement. – When the Secretary compromises a tax liability under this

section and the amount of the liability is at least one thousand dollars ($1,000), the Secretary

must make a written statement that sets out the amount of the liability, the amount accepted

under the compromise, a summary of the facts concerning the liability, and the findings on which

the compromise is based. The Secretary must sign the statement and keep a record of the

statement. If the compromise settles a dispute that is in litigation, the Secretary must obtain the

approval of the Attorney General before accepting the compromise, and the Attorney General

must sign the statement describing the compromise. (1957, c. 1340, s. 10; 1959, c. 1259, s. 8;

1973, c. 476, s. 193; 1985, c. 114, s. 11; 1991 (Reg. Sess., 1992), c. 1007, s. 11; 2008-107, s.

28.16(f); 2013-316, s. 9(b); 2015-241, s. 32.18(f).)

§ 105-238. Tax a debt.

Every tax imposed by this Subchapter, and all increases, interest, and penalties thereon, shall

become, from the time it is due and payable, a debt from the person, firm, or corporation liable to

pay the same to the State of North Carolina. (1939, c. 158, s. 909.)


§ 105-239.1. Transferee liability.

(a) Lien and Liability. – Property transferred for an inadequate consideration to a donee,

heir, devisee, distributee, stockholder of a liquidated corporation, or any other person at a time

when the transferor is insolvent or is rendered insolvent by reason of the transfer is subject to a

lien for any taxes owing by the transferor to the State of North Carolina at the time of the transfer

whether or not the amount of the taxes has been ascertained or assessed at the time of the

transfer. G.S. 105-241 applies to this tax lien. In the event the transferee has disposed of the

property so that it cannot be subjected to the State's tax lien, the transferee is personally liable for

the difference between the fair market value of the property at the time of the transfer and the

actual consideration, if any, paid to the transferor by the transferee.

(b) Procedure. – The Department may proceed to enforce a lien that arises under this

section against property transferred by a taxpayer to another person or to hold that person liable

for the tax due by sending the person a notice of proposed assessment in accordance with G.S.

105-241.9. The Department has the burden of establishing that a person to whom property was

transferred is liable. The period of limitations for assessment of any liability against a transferee

or enforcing the lien against the transferred property expires one year after the expiration of the

period of limitations for assessment against the transferor.

(c) Proceeds. – When property transferred by a taxpayer to another person is sold to

satisfy the lien that arises under this section, the person is entitled to receive from the proceeds of

the sale the amount of consideration, if any, the person paid for the property. The proceeds must

be applied for this purpose before they are applied to satisfy the lien.


(d) Repealed by Session Laws 2007-491, s. 27, effective January 1, 2008. (1957, c.

1340, s. 10; 1973, c. 476, s. 193; 1993, c. 450, s. 11; 2007-491, s. 27; 2011-284, s. 69.)

§ 105-240. Tax upon settlement of fiduciary's account.

No final account of a fiduciary shall be allowed by the probate court unless such account

shows, and the judge of said court finds, that all taxes imposed by the provisions of this

Subchapter upon said fiduciary, which have become payable, have been paid, and that all taxes

which may become due are secured by bond, deposit, or otherwise. The certificate of the

Secretary of Revenue and the receipt for the amount of tax herein certified shall be conclusive as

to the payment of the tax to the extent of said certificate.

For the purpose of facilitating the settlement and distribution of estates held by fiduciaries,

the Secretary of Revenue, with the approval of the Attorney General, may, on behalf of the State,

agree upon the amount of taxes at any time due or to become due from such fiduciaries under the

provisions of this Subchapter, and the payment in accordance with such agreement shall be full

satisfaction of the taxes to which the agreement relates. (1939, c. 158, s. 911; 1973, c. 476, s.

193.)

§ 105-240.1. Agreements with respect to domicile.

Whenever reasonably necessary in order to facilitate the collection of any tax, the Secretary

of Revenue with the consent and approval of the Attorney General, is authorized to make

agreements with the taxing officials of other states of the United States or with taxpayers in cases

of disputes as to the domicile of a decedent. (1957, c. 1340, s. 10; 1973, c. 476, s. 193.)

§ 105-241. Where and how taxes payable; tax period; liens.

(a) Form of Payment. – Taxes are payable in the national currency. The Secretary shall

prescribe where taxes are to be paid and whether taxes must be paid in cash, by check, by

electronic funds transfer, or by another method.

(b) Electronic Funds Transfer. – Payment by electronic funds transfer is required as

provided in this subsection.

(1) Corporate estimated taxes. – A corporation that is required under the Code to

pay its federal-estimated corporate income tax by electronic funds transfer

must pay its State-estimated corporate income tax by electronic funds transfer

as provided in G.S. 105-163.40.

(2) Prepayment taxes. – A taxpayer that is required to prepay tax under G.S.

105-116 or G.S. 105-164.16 must pay the tax by electronic funds transfer.

(2a) Motor fuel taxes. – A taxpayer that files an electronic return under Subchapter

V of this Chapter or Article 3 of Chapter 119 of the General Statutes must pay

the tax by electronic funds transfer.

(3) Large tax payments. – Except as otherwise provided in this subsection, the

Secretary shall not require a taxpayer to pay a tax by electronic funds transfer

unless, during the applicable period for that tax, the average amount of the

taxpayer's required payments of the tax was at least twenty thousand dollars

($20,000) a month. The twenty thousand dollar ($20,000) threshold applies

separately to each tax. The applicable period for a tax is a 12-month period,

designated by the Secretary, preceding the imposition or review of the

payment requirement. The requirement that a taxpayer pay a tax by electronic


funds transfer remains in effect until suspended by the Secretary. Every 12

months after requiring a taxpayer to pay a tax by electronic funds transfer, the

Secretary must determine whether, during the applicable period for that tax,

the average amount of the taxpayer's required payments of the tax was at least

twenty thousand dollars ($20,000) a month. If it was not, the Secretary must

suspend the requirement that the taxpayer pay the tax by electronic funds

transfer and must notify the taxpayer in writing that the requirement has been

suspended.

(c) Tax Period. – Except as otherwise provided in this Chapter, taxes are levied for the

fiscal year of the state in which they became due.

(d) Lien. – This subsection applies except when another Article of this Chapter contains

contrary provisions with respect to a lien for a tax levied in that Article. The lien of a tax attaches

to all real and personal property of a taxpayer on the date a tax owed by the taxpayer becomes

due. The lien continues until the tax and any interest, penalty, and costs associated with the tax

are paid. A tax lien is not extinguished by the sale of the taxpayer's property. A tax lien,

however, is not enforceable against a bona fide purchaser for value or the holder of a duly

recorded lien unless:

(1) In the case of real property, a certificate of tax liability or a judgment was first

docketed in the office of the clerk of superior court of the county in which the

real property is located.

(2) In the case of personal property, there has already been a levy on the property

under an execution or a tax warrant.

The priority of these claims and liens is determined by the date and time of recording, docketing,

levy, or bona fide purchase.

If a taxpayer executes an assignment for the benefit of creditors or if insolvency proceedings

are instituted against a taxpayer who owes a tax, the tax lien attaches to all real and personal

property of the taxpayer as of the date and time the taxpayer executes the assignment for the

benefit of creditors or the date and time the insolvency proceedings are instituted. In these cases,

the tax lien is subject only to a prior recorded specific lien and the reasonable costs of

administering the assignment or the insolvency proceedings. (1939, c. 158, s. 912; 1949, c. 392,

s. 6; 1957, c. 1340, s. 5; 1993, c. 450, s. 2; 1999-389, s. 8; 2001-427, s. 6(b); 2005-435, s. 2;

2007-527, s. 31; 2010-95, s. 25; 2012-79, s. 2.15.)






§ 105-241.6. Statute of limitations for refunds.


(a) General. – The general statute of limitations for obtaining a refund of an overpayment

applies unless a different period applies under subsection (b) of this section. The general statute

of limitations for obtaining a refund of an overpayment is the later of the following:

(1) Three years after the due date of the return.

(2) Two years after payment of the tax.

(b) Exceptions. – The exceptions to the general statute of limitations for obtaining a

refund of an overpayment are as follows:

(1) Federal Determination. – If a taxpayer files a return reflecting a federal

determination and the return is filed within the time required by this

Subchapter, the period for requesting a refund is one year after the return

reflecting the federal determination is filed or three years after the original

return was filed or due to be filed, whichever is later.

(2) Waiver. – A taxpayer's waiver of the statute of limitations for making a

proposed assessment extends the period in which the taxpayer can obtain a

refund to the end of the period extended by the waiver.

(3) Worthless Debts or Securities. – Section 6511(d)(1) of the Code applies to an

overpayment of the tax levied in Part 2 or 3 of Article 4 of this Chapter to the

extent the overpayment is attributable to either of the following:

a. The deductibility by the taxpayer under section 166 of the Code of a

debt that becomes worthless, or under section 165(g) of the Code of a

loss from a security that becomes worthless.

b. The effect of the deductibility of a debt or loss described in subpart a.

of this subdivision on the application of a carryover to the taxpayer.

(4) Capital Loss and Net Operating Loss Carrybacks. – Section 6511(d)(2) of the

Code applies to an overpayment of the tax levied in Part 2 or 3 of Article 4 of

this Chapter to the extent the overpayment is attributable to a capital loss

carryback under section 1212(c) of the Code or to a net operating loss

carryback under section 172 of the Code.

(5) Contingent Event. – The period to request a refund of an overpayment may be

extended as provided in this subdivision if an event or condition prevents the

taxpayer from possessing the information necessary to file an accurate and

definite request for a refund of an overpayment under this Chapter:

a. If a taxpayer is subject to a contingent event and files written notice

with the Secretary, the period to request a refund of an overpayment is

six months after the contingent event concludes. For purposes of this

subdivision, a "contingent event" means litigation or a state tax audit

initiated prior to the expiration of the statute of limitations under

subsection (a) of this section, the pendency of which prevents the

taxpayer from possessing the information necessary to file an accurate

and definite request for a refund of an overpayment under this Chapter.

The written notice to the Secretary must be filed prior to expiration of

the statute of limitations under subsection (a) of this section for a

return or payment in which a contingent event prevents a taxpayer

from filing a definite request for a refund of an overpayment. The

notice must identify and describe the contingent event, identify the

type of tax, list the return or payment affected by the contingent event,


and state in clear terms the basis for and an estimated amount of the

overpayment.

b. If a taxpayer contends that an event or condition other than a

contingent event, as defined in this subdivision, has occurred that

prevents the taxpayer from filing an accurate and definite request for a

refund of an overpayment within the period under subsection (a) of

this section, the taxpayer may submit a written request to the Secretary

seeking an extension of the statute of limitations allowed under this

subdivision. The request must establish by clear, convincing proof that

the event or condition is beyond the taxpayer's control and that it

prevents the taxpayer's timely filing of an accurate and definite request

for a refund of an overpayment. The request must be filed within the

period under subsection (a) of this section. The Secretary's decision on

the request is final and is not subject to administrative or judicial

review. (2007-491, s. 1; 2013-414, s. 47(a); 2015-6, s. 2.16.)

§ 105-241.7. Procedure for obtaining a refund.

(a) Initiated by Department. – The Department must refund an overpayment made by a

taxpayer if the Department discovers the overpayment before the expiration of the statute of

limitations for obtaining a refund. Discovery occurs in any of the following circumstances:

(1) The automated processing of a return indicates the return requires further

review.

(2) A review of a return by an employee of the Department indicates an

overpayment.

(3) An audit of a taxpayer by an employee of the Department indicates an

overpayment.

(b) (Effective until January 1, 2014) Initiated by Taxpayer. – A taxpayer may request a

refund of an overpayment made by the taxpayer by taking one of the following actions within the

statute of limitations for obtaining a refund:

(1) Filing an amended return reflecting an overpayment due the taxpayer.

(2) Filing a claim for refund. The claim must identify the taxpayer, the type and

amount of tax overpaid, the filing period to which the overpayment applies,

and the basis for the claim. The taxpayer's statement of the basis of the claim

does not limit the taxpayer from changing the basis.

(b) (Effective January 1, 2014) Initiated by Taxpayer. – A taxpayer may request a

refund of an overpayment made by the taxpayer by taking one of the actions listed in this

subsection within the statute of limitations for obtaining a refund. A taxpayer may not request a

refund of an overpayment based on a contingent event as defined in G.S. 105-241.6(b)(5) until

the event is finalized and an accurate and definite request for refund of an overpayment may be

determined. The actions are:

(1) Filing an amended return reflecting an overpayment due the taxpayer.

(2) Filing a claim for refund. The claim must identify the taxpayer, the type and

amount of tax overpaid, the filing period to which the overpayment applies,

and the basis for the claim. The taxpayer's statement of the basis of the claim

does not limit the taxpayer from changing the basis.


(c) Action on Request. – When a taxpayer files an amended return or a claim for refund,

the Department must take one of the actions listed in this subsection within six months after the

date the amended return or claim for refund is filed. If the Department does not take one of these

actions within this time limit, the inaction is considered a proposed denial of the requested

refund.

(1) Send the taxpayer a refund of the amount shown due on the amended return or

claim for refund.

(2) Adjust the amount of the requested refund by increasing or decreasing the

amount shown due on the amended return or claim for refund and send the

taxpayer a refund of the adjusted amount. If the adjusted amount is less than

the amount shown due on the amended return or claim for refund, the adjusted

refund must include a reason for the adjustment. The adjusted refund is

considered a notice of proposed denial for the amount of the requested refund

that is not included in the adjusted refund.

(3) Deny the refund and send the taxpayer a notice of proposed denial.

(4) Send the taxpayer a letter requesting additional information concerning the

requested refund. If a taxpayer does not respond to a request for information,

the Department may deny the refund and send the taxpayer a notice of

proposed denial. If a taxpayer provides the requested information, the

Department must take one of the actions listed in this subsection within the

later of the following:

a. The remainder of the six-month period.

b. 30 days after receiving the information.

c. A time period mutually agreed upon by the Department and the

taxpayer.

(d) Notice. – A notice of a proposed denial of a request for refund must contain the

following information:

(1) The basis for the proposed denial. The statement of the basis of the denial

does not limit the Department from changing the basis.

(2) The circumstances under which the proposed denial will become final.

(e) Restrictions. – The Department may not refund any of the following:

(1) Until a taxpayer files a final return for a tax period, an amount paid before the

final return is filed.

(2) An overpayment setoff under Chapter 105A, the Setoff Debt Collection Act,

or under another setoff debt collection program authorized by law.

(3) An income tax overpayment the taxpayer has elected to apply to another

purpose as provided in this Article.

(4) An individual income tax overpayment of less than one dollar ($1.00) or

another tax overpayment of less than three dollars ($3.00), unless the taxpayer

files a written claim for the refund.

(f) Effect of Denial or Refund. – A proposed denial of a refund by the Secretary is

presumed to be correct. A refund does not absolve a taxpayer of a tax liability that may in fact

exist. The Secretary may propose an assessment for any deficiency as provided in this Article.

(2007-491, s. 1; 2011-4, s. 1; 2013-414, s. 47(b).)

§ 105-241.8. Statute of limitations for assessments.


(a) General. – The general statute of limitations for proposing an assessment applies

unless a different period applies under subsection (b) of this section. The general statute of

limitations for proposing an assessment is the later of the following:

(1) Three years after the due date of the return.

(2) Three years after the taxpayer filed the return.

(b) Exceptions. – The exceptions to the general statute of limitations for proposing an

assessment are as follows:

(1) Federal determination. – If a taxpayer files a return reflecting a federal

determination and the return is filed within the time required by this

Subchapter, the period for proposing an assessment of any tax due is one year

after the return is filed or three years after the original return was filed or due

to be filed, whichever is later. If there is a federal determination and the

taxpayer does not file the return within the required time, the period for

proposing an assessment of any tax due is three years after the date the

Secretary received the final report of the federal determination.

(2) Failure to file or filing false return. – There is no statute of limitations and the

Secretary may propose an assessment of tax due from a taxpayer at any time if

any of the following applies:

a. The taxpayer did not file a return.

b. The taxpayer filed a fraudulent return.

c. The taxpayer attempted in any manner to fraudulently evade or defeat

the tax.

(3) Tax forfeiture. – If a taxpayer forfeits a tax credit or tax benefit pursuant to

forfeiture provisions of this Chapter, the period for proposing an assessment

of any tax due as a result of the forfeiture is three years after the date of the

forfeiture.

(4) Nonrecognition of gain. – If a taxpayer elects under section 1033(a)(2)(A) of

the Code not to recognize gain from involuntary conversion of property into

money, the period for proposing an assessment of any tax due as a result of

the conversion or election is the applicable period provided under section

1033(a)(2)(C) or section 1033(a)(2)(D) of the Code. (2007-491, s. 1.)

§ 105-241.9. Procedure for proposing an assessment.

(a) Authority. – The Secretary may propose an assessment against a taxpayer for tax due

from the taxpayer. The Secretary must base a proposed assessment on the best information

available. A proposed assessment of the Secretary is presumed to be correct.

(b) Time Limit. – The Secretary must propose an assessment within the statute of

limitations for proposed assessments unless the taxpayer waives the limitations period before it

expires by agreeing in writing to extend the period. A taxpayer may waive the limitations period

for either a definite or an indefinite time. If the taxpayer waives the limitations period, the

Secretary may propose an assessment at any time within the time extended by the waiver.

(c) Notice. – The Secretary must give a taxpayer written notice of a proposed assessment.

The notice of a proposed assessment must contain the following information:

(1) The basis for the proposed assessment. The statement of the basis for the

proposed assessment does not limit the Department from changing the basis.


(2) The amount of tax, interest, and penalties included in the proposed

assessment. The amount for each of these must be stated separately.

(2a) The date a failure to pay penalty will apply to the proposed assessment if the

proposed assessment is not paid by that date and the amount of the penalty. If

the proposed assessment is not paid by the specified date, the failure to pay

penalty is considered to be assessed and applies to the proposed assessment

without further notice.

(3) The circumstances under which the proposed assessment will become final

and collectible. (2007-491, s. 1; 2010-95, s. 8(a); 2011-330, s. 34.)

§ 105-241.10. Limit on refunds and assessments after a federal determination.

The limitations in this section apply when a taxpayer files a timely return reflecting a federal

determination that affects the amount of State tax payable and the general statute of limitations

for requesting a refund or proposing an assessment of the State tax has expired. A federal

determination is a correction or final determination by the federal government of the amount of a

federal tax due. A return reflecting a federal determination is timely if it is filed within the time

required by G.S. 105-130.20, 105-159, 105-160.8, or 105-163.6A, as appropriate. The limitations

are:

(1) Refund. – A taxpayer is allowed a refund only if the refund is the result of

adjustments related to the federal determination.

(2) Assessment. – A taxpayer is liable for additional tax only if the additional tax

is the result of adjustments related to the federal determination. A proposed

assessment may not include an amount that is outside the scope of this

liability. (2007-491, s. 1; 2008-107, s. 28.18(d); 2013-316, s. 7(b).)

§ 105-241.11. Requesting review of proposed denial of refund or proposed assessment.

(a) Procedure. – A taxpayer who objects to a proposed denial of a refund or a proposed

assessment of tax may request a Departmental review of the proposed action by filing a request

for review. The request must be filed with the Department as follows:

(1) Within 45 days of the date the notice of the proposed denial of the refund or

proposed assessment was mailed to the taxpayer, if the notice was delivered

by mail.

(2) Within 45 days of the date the notice of the proposed denial of the refund or

proposed assessment was delivered to the taxpayer, if the notice was delivered

in person.

(3) At any time between the date that inaction by the Department on a request for

refund is considered a proposed denial of the refund and the date the time

periods set in the other subdivisions of this subsection expire.

(b) Filing. – A request for a Departmental review of a proposed denial of a refund or a

proposed assessment is considered filed on the following dates:

(1) For a request that is delivered in person, the date it is delivered.

(2) For a request that is mailed, the date determined in accordance with G.S.

105-263.

(3) For a request delivered by another method, the date the Department receives

it.


(c) FTP Penalty. – A request for a Departmental review of a proposed assessment is

considered a request for a Departmental review of a failure to pay penalty that is based on the

assessment. A taxpayer who does not request a Departmental review of a proposed assessment

may not request a Departmental review of a failure to pay penalty that is based on the

assessment. (2007-491, s. 1; 2008-134, s. 5(a); 2010-95, ss. 8(b), 10(b).)

§ 105-241.12. Result when taxpayer does not request a review.

(a) Refund. – If a taxpayer does not file a timely request for a Departmental review of a

proposed denial of a refund, the proposed denial is final and is not subject to further

administrative or judicial review. A taxpayer whose proposed denial becomes final may not file

another amended return or claim for refund to obtain the denied refund.

(b) Assessment. – If a taxpayer does not file a timely request for a Departmental review

of a proposed assessment, the proposed assessment is final and is not subject to further

administrative or judicial review. Upon payment of the tax, the taxpayer may request a refund of

the tax.

Before the Department collects a proposed assessment that becomes final when the taxpayer

does not file a timely request for a Departmental review, the Department must send the taxpayer

a notice of collection. A notice of collection must contain the following information:

(1) A statement that the proposed assessment is final and collectible.

(2) The amount of tax, interest, and penalties payable by the taxpayer.

(3) An explanation of the collection options available to the Department if the

taxpayer does not pay the amount shown due on the notice and any remedies

available to the taxpayer concerning these collection options. (2007-491, s. 1.)

§ 105-241.13. Action on request for review.

(a) Action on Request. – If a taxpayer files a timely request for a Departmental review of

a proposed denial of a refund or a proposed assessment, the Department must conduct a review

of the proposed denial or proposed assessment and take one of the following actions:

(1) Grant the refund or remove the assessment.

(2) Schedule a conference with the taxpayer.

(3) Request additional information from the taxpayer concerning the requested

refund or proposed assessment.

(b) Conference. – When the Department reviews a proposed denial of a refund or a

proposed assessment and does not grant the refund or remove the assessment, the Department

must schedule a conference with the taxpayer. The Department must set the time and place for

the conference, which may include a conference by telephone, and must send the taxpayer notice

of the designated time and place. The Department must send the notice at least 30 days before

the date of the conference or, if the Department and the taxpayer agree, within a shorter period.

The conference is an informal proceeding at which the taxpayer and the Department must

attempt to resolve the case. Testimony under oath is not taken, and the rules of evidence do not

apply. A taxpayer may designate a representative to act on the taxpayer's behalf. The taxpayer

may present any objections to the proposed denial of refund or proposed assessment at the

conference.

(c) After Conference. – One of the following must occur after the Department conducts a

conference on a proposed denial of a refund or a proposed assessment:

(1) The Department and the taxpayer agree on a settlement.


(2) The Department and the taxpayer agree that additional time is needed to

resolve the taxpayer's objection to the proposed denial of the refund or

proposed assessment.

(3) The Department and the taxpayer are unable to resolve the taxpayer's

objection to the proposed denial of the refund or proposed assessment. If a

taxpayer fails to attend a scheduled conference on the proposed denial of a

refund or a proposed assessment without prior notice to the Department, the

Department and the taxpayer are considered to be unable to resolve the

taxpayer's objection. (2007-491, s. 1.)

§ 105-241.14. Final determination after Departmental review.

(a) Refund. – If a taxpayer files a timely request for a Departmental review of a proposed

denial of a refund and the Department and the taxpayer are unable to resolve the taxpayer's

objection to the proposed denial, the Department must send the taxpayer a notice of final

determination concerning the refund. The notice of final determination must state the basis for

the determination and inform the taxpayer of the procedure for contesting the determination. The

statement of the basis for the determination does not limit the Department from changing the

basis.

(b) Assessment. – If a taxpayer files a timely request for a Departmental review of a

proposed assessment and the Department and the taxpayer are unable to resolve the taxpayer's

objection to the proposed assessment, the Department must send the taxpayer a notice of final

determination concerning the assessment. A notice of final determination concerning an

assessment must contain the following information:

(1) The basis for the determination. This information may be stated on the notice

or be set out in a separate document. The statement of the basis for the

determination does not limit the Department from changing the basis.

(2) The amount of tax, interest, and penalties payable by the taxpayer.

(3) The procedure the taxpayer must follow to contest the final determination.

(4) A statement that the amount payable stated on the notice is collectible by the

Department unless the taxpayer contests the final determination.

(5) An explanation of the collection options available to the Department if the

taxpayer does not pay the amount shown due on the notice and any remedies

available to the taxpayer concerning these collection options.

(c) Time Limit. – The process set out in G.S. 105-241.13 for reviewing and attempting to

resolve a proposed denial of a refund or a proposed assessment must conclude, and a final

determination must be issued within nine months after the date the taxpayer files a request for

review. The Department and the taxpayer may extend this time limit by mutual agreement.

Failure to issue a notice of final determination within the required time does not affect the

validity of a proposed denial of a refund or proposed assessment. (2007-491, s. 1; 2008-134, s.

6(a).)

§ 105-241.15. Contested case hearing on final determination.

A taxpayer who disagrees with a notice of final determination issued by the Department may

contest the determination by filing a petition for a contested case hearing at the Office of

Administrative Hearings in accordance with Article 3 of Chapter 150B of the General Statutes. A

taxpayer may file a petition for a contested case hearing only if the taxpayer has exhausted the


prehearing remedy. A taxpayer's prehearing remedy is exhausted when the Department issues a

final determination after conducting a review and a conference. (2007-491, s. 1.)

§ 105-241.16. Judicial review of decision after contested case hearing.

A taxpayer aggrieved by the final decision in a contested case commenced at the Office of

Administrative Hearings may seek judicial review of the decision in accordance with Article 4 of

Chapter 150B of the General Statutes. Notwithstanding G.S. 150B-45, a petition for judicial

review must be filed in the Superior Court of Wake County and in accordance with the

procedures for a mandatory business case set forth in G.S. 7A-45.4(b) through (f). Before filing a

petition for judicial review, a taxpayer must pay the amount of tax, penalties, and interest the

final decision states is due. A taxpayer may appeal a decision of the Business Court to the

appellate division in accordance with G.S. 150B-52. (2007-491, s. 1; 2010-95, s. 9.)

§ 105-241.17. Civil action challenging statute as unconstitutional.

A taxpayer who claims that a tax statute is unconstitutional may bring a civil action in the

Superior Court of Wake County to determine the taxpayer's liability under that statute if all of

the conditions in this section are met. In filing an action under this section, a taxpayer must

follow the procedures for a mandatory business case set forth in G.S. 7A-45.4(b) through (f). The

conditions for filing a civil action are:

(1) The taxpayer exhausted the prehearing remedy by receiving a final

determination after a review and a conference.

(2) The taxpayer commenced a contested case at the Office of Administrative

Hearings.

(3) The Office of Administrative Hearings dismissed the contested case petition

for lack of jurisdiction because the sole issue is the constitutionality of a

statute and not the application of a statute.

(4) The taxpayer has paid the amount of tax, penalties, and interest the final

determination states is due.

(5) The civil action is filed within two years of the dismissal. (2007-491, s. 1.)

§ 105-241.18. Class actions.

(a) Authority. – A class action against the State for the refund of a tax paid may be

maintained only on the grounds of an alleged unconstitutional statute and only if the

requirements of Rule 23 of the North Carolina Rules of Civil Procedure and the requirements of

this section are met. For purposes of this section, a class action commences upon the later of the

following:

(1) The date a complaint is filed in accordance with G.S. 105-241.17 alleging the

existence of a class pursuant to Rule 23 of the North Carolina Rules of Civil

Procedure.

(2) The date a complaint filed in accordance with G.S. 105-241.17 is amended to

allege the existence of a class.

(b) Class. – To serve as a class representative of a class action brought under this section,

a taxpayer must comply with all of the conditions in G.S. 105-241.17 and the taxpayer's claims

must be typical of the claims of the class members. A taxpayer who is not a class representative

is eligible to become a member of a class if the taxpayer could have filed a claim for refund

under G.S. 105-241.7 as of the date the class action commenced or as of a subsequent date set by


the court, whether or not the taxpayer actually filed a claim for refund as of that date. An eligible

class member who is not a class representative and who indicates a desire to be included in the

class in accordance with the procedure approved by the court under subsection (c) of this section

is not required to follow the procedures in G.S. 105-241.11 through G.S. 105-241.17 for the

administrative and judicial review of a request for refund or a proposed denial of a request for

refund.

(c) Procedure. – To become a member of a class action brought under this section, an

eligible taxpayer must affirmatively indicate a desire to be included in the class in response to a

notice of the class action. If the court so orders, the Department must provide to a class

representative a list of names and last known addresses of all taxpayers who are readily

determinable by the Department and who are eligible to become a member of the class. The

court must approve the content of a notice of a class action, the method for distributing the

notice, and the procedure by which an eligible taxpayer affirmatively indicates a desire to be

included in the class. The class representative must advance the costs of notifying eligible

taxpayers of the class action.

(d) Statute of Limitations. – The statute of limitations for filing a claim for refund of tax

paid due to an alleged unconstitutional statute is tolled for a taxpayer who is eligible to become a

member of a class action. The tolling begins on the date the class action is commenced. For a

taxpayer who does not join the class, the tolling ends when the taxpayer does not affirmatively

indicate a desire to be included in the class within the time and in accordance with the procedure

approved by the court under subsection (c) of this section. For a taxpayer who joins the class, the

tolling ends when a court enters any of the following in the class action:

(1) A final order denying certification of the class.

(2) A final order decertifying the class.

(3) A final order dismissing the class action without an adjudication on the merits.

(4) A final judgment on the merits.

(e) Effect on Nonparticipating Taxpayers. – A taxpayer who does not become a member

of a class may file and prosecute a claim for refund, if the statute of limitations has not otherwise

expired for filing the claim, or may contest a pending assessment in accordance with the

procedures in G.S. 105-241.11 through G.S. 105-241.17. Except as otherwise provided in this

subsection, the effect of an adjudication in a class action on a nonparticipating taxpayer's claim

for refund or contest of an assessment is governed by the normal rules relating to claim

preclusion and issue preclusion.

If a final judgment on the merits is entered in a class action in favor of the class, the

following applies to an eligible taxpayer who did not become a member of the class:

(1) The taxpayer is not entitled to receive any monetary relief awarded to the

class on account of taxes previously paid by the taxpayer.

(2) If the taxpayer has been assessed for failure to pay the tax at issue in the class

action and the taxpayer has not paid the assessment, then the assessment is

abated.

(3) The taxpayer is relieved of any future liability for the tax that is the subject of

the class action. (2008-107, s. 28.28(b).)

§ 105-241.19. Declaratory judgments, injunctions, and other actions prohibited.

The remedies in G.S. 105-241.11 through G.S. 105-241.18 set out the exclusive remedies for

disputing the denial of a requested refund, a taxpayer's liability for a tax, or the constitutionality


of a tax statute. Any other action is barred. Neither an action for declaratory judgment, an action

for an injunction to prevent the collection of a tax, nor any other action is allowed. (2007-491, s.

1; 2008-107, s. 28.28(c).)

§ 105-241.20. Delivery of notice to the taxpayer.

(a) Scope. – This section applies to the following notices:

(1) A proposed denial of a refund.

(2) A proposed assessment.

(3) A notice of collection.

(4) A final determination.

(b) Method. – The Secretary must deliver a notice listed in subsection (a) of this section

to a taxpayer either in person or by United States mail sent to the taxpayer's last known address.

A notice mailed to a taxpayer is presumed to have been received by the taxpayer unless the

taxpayer makes an affidavit to the contrary within 90 days after the notice was mailed. If the

taxpayer makes this affidavit, the notice is considered to have been delivered on the date the

taxpayer makes the affidavit, and any time limit affected by the notice is extended to the date the

taxpayer makes the affidavit. (2007-491, s. 1.)

§ 105-241.21. Interest on taxes.

(a) Rate. – The interest rate set by the Secretary applies to interest that accrues on

overpayments and assessments of tax. On or before June 1 and December 1 of each year, the

Secretary must establish the interest rate to be in effect during the six-month period beginning on

the next succeeding July 1 and January 1, respectively. In determining the interest rate, the

Secretary must give due consideration to current market conditions and to the rate that will be in

effect on that date pursuant to the Code. If no new rate is established, the rate in effect during the

preceding six-month period continues in effect. The rate established by the Secretary may not be

less than five percent (5%) per year and may not exceed sixteen percent (16%) per year.

(b) Accrual on Underpayments. – Interest accrues on an underpayment of tax from the

date set by statute for payment of the tax until the tax is paid. Interest accrues only on the

principal of the tax and does not accrue on any penalty.

(c) Accrual on Refund. – Interest accrues on an overpayment of tax from the time set in

the following subdivisions until the refund is paid.

(1) Franchise, income, and gross premiums. – Interest on an overpayment of a tax

levied under Article 3 of this Chapter and payable on an annual basis or of a

tax levied under Article 4 or 8B of this Chapter accrues from a date 45 days

after the latest of the following dates:

a. The date the final return was filed.

b. The date the final return was due to be filed.

c. The date of the overpayment. The date of an overpayment of a tax

levied under Article 4 or Article 8B of this Chapter is determined in

accordance with section 6611(d), (f), (g), and (h) of the Code.

(2) All other taxes. – Interest on an overpayment of a tax that is not included in

subdivision (1) of this subsection accrues from a date that is 90 days after the

date the tax was paid.

(d) When Refund Is Paid. – A refund sent to a taxpayer is considered paid on a date

determined by the Secretary that is no sooner than five days after a refund check is mailed. A


refund set off against a debt pursuant to Chapter 105A of the General Statutes is considered paid

five days after the Department mails the taxpayer a notice of the setoff, unless G.S. 105A-5 or

G.S. 105A-8 requires the agency that requested the setoff to return the refund to the taxpayer. In

this circumstance, the refund that was set off is not considered paid until five days after the

agency that requested the refund mails the taxpayer a check for the refund. (2007-491, s. 1.)

§ 105-241.22. Collection of tax.

The Department may collect a tax in the following circumstances:

(1) When a taxpayer files a return showing an amount due with the return and

does not pay the amount shown due. This subdivision does not apply to a

consolidated or combined return filed at the request of the Secretary under

Part 1 of Article 4 of this Chapter.

(2) When the Department sends a notice of collection after a taxpayer does not

file a timely request for a Departmental review of a proposed assessment of

tax.

(3) When a taxpayer and the Department agree on a settlement concerning the

amount of tax due.

(4) When the Department sends a notice of final determination concerning an

assessment of tax and the taxpayer does not file a timely petition for a

contested case hearing on the assessment.

(5) When a final decision is issued on a proposed assessment of tax after a

contested case hearing.

(6) When the Office of Administrative Hearings dismisses a petition for a

contested case for lack of jurisdiction because the sole issue is the

constitutionality of a statute and not the application of a statute. (2007-491, s.

1; 2008-134, s. 7(a); 2010-31, s. 31.10(c).)

§ 105-241.23. Jeopardy assessment and collection.

(a) Action. – The Secretary may at any time within the statute of limitations immediately

assess and collect any tax the Secretary finds is due from a taxpayer if the Secretary determines

that collection of the tax is in jeopardy and immediate assessment and collection are necessary in

order to protect the interest of the State. In making a jeopardy collection, the Secretary may use

any of the collection remedies in G.S. 105-242 and is not required to wait any period of time

before using these remedies. Within 30 days after initiating a jeopardy collection, the Secretary

must give the taxpayer the notice of proposed assessment required by G.S. 105-241.9.

(b) Review by Department. – Within five days after initiating a jeopardy collection that is

not the result of a criminal investigation or of a liability for a tax imposed under Article 2D of

this Chapter, the Secretary must provide the taxpayer with a written statement of the information

upon which the Secretary relied in initiating the jeopardy collection. Within 30 days after receipt

of this written statement or, if no statement is received, within 30 days after the statement was

due, the taxpayer may request the Secretary to review the action taken. After receipt of this

request, the Secretary must determine whether initiating the jeopardy collection was reasonable

under all the circumstances and whether the amount assessed and collected was reasonable under

all the circumstances. The Secretary must give the taxpayer written notice of this determination

within 30 days after the request.


(c) Judicial Review. – Within 90 days after the earlier of the date a taxpayer received or

should have received a determination of the Secretary concerning a jeopardy collection under

subsection (b) of this section, the taxpayer may bring a civil action seeking review of the

jeopardy collection. The taxpayer may bring the action in the Superior Court of Wake County or

in the county in North Carolina in which the taxpayer resides. Within 20 days after the action is

filed, the court must determine whether the initiation of the jeopardy collection was reasonable

under the circumstances. If the court determines that an action of the Secretary was unreasonable

or inappropriate, the court may order the Secretary to take any action the court finds appropriate.

If the taxpayer shows reasonable grounds why the 20-day limit on the court should be extended,

the court may grant an extension of not more than 40 additional days. (2007-491, s. 1.)

§ 105-242. Warrants for collection of taxes; garnishment and attachment; certificate or

judgment for taxes.

(a) Levy and Sale. – If a taxpayer does not pay a tax within 30 days after it is collectible

under G.S. 105-241.22, the Secretary may take either of the following actions to collect the tax:

(1) Issue a warrant directing the sheriff of any county of the State to levy upon

and sell the real and personal property of the taxpayer found within the county

for the payment of the tax and the cost of executing the warrant and to return

to the Secretary the money collected, within a time to be specified in the

warrant but not less than 60 days from the date of the warrant. The procedure

for executions issued against property upon judgments of a court apply to

executions under a warrant.

(2) Issue a warrant to any revenue officer or other employee of the Department

charged with the duty to collect taxes, commanding the officer or employee to

levy upon and sell the taxpayer's personal property found within the State for

the payment of the tax. Except as otherwise provided in this subdivision, the

levy upon and sale of personal property by an officer or employee of the

Department is subject to and must be conducted in accordance with the laws

governing the sale of property levied upon under execution. The Secretary

may sell the property levied upon in any county and may advertise the sale in

any reasonable manner and for any reasonable period of time to produce an

adequate bid for the property. Levy and sale fees, plus actual advertising

costs, must be added to and collected in the same manner as taxes. The

Secretary is not required to file a report of sale with the clerk of superior

court, if the sale is otherwise publicly reported.

(b) Attachment and Garnishment. – Intangible property that belongs to a taxpayer, is

owed to a taxpayer, or has been transferred by a taxpayer under circumstances that would permit

it to be levied upon if it were tangible property is subject to attachment and garnishment in

payment of a tax that is due from the taxpayer and is collectible under G.S. 105-241.22.

Intangible personal property includes bank deposits, rent, salaries, wages, property held in the

Escheat Fund, and any other property incapable of manual levy or delivery. G.S. 105-242.1 sets

out the procedure for attachment and garnishment of intangible property.

A person who is in possession of intangible property that is subject to attachment and

garnishment is the garnishee and is liable for the amount the taxpayer owes. The liability applies

only to the amount of the taxpayer's property in the garnishee's possession, reduced by any

amount the taxpayer owes the garnishee.


The Secretary may submit to a financial institution, as defined in G.S. 53B-2, information

that identifies a taxpayer who owes a tax debt that is collectible under G.S. 105-241.22 and the

amount of the debt. The Secretary may submit the information on a quarterly basis or, with the

agreement of the financial institution, on a more frequent basis. A financial institution that

receives the information must determine the amount, if any, of intangible property it holds that

belongs to the taxpayer and must inform the Secretary of its determination. The Secretary must

reimburse a financial institution for its costs in providing the information, not to exceed the

amount payable to the financial institution under G.S. 110-139 for providing information for use

in locating a noncustodial parent.

No more than ten percent (10%) of a taxpayer's wages or salary is subject to attachment and

garnishment. The wages or salary of an employee of the United States, the State, or a political

subdivision of the State are subject to attachment and garnishment.

(c) Certificate of Tax Liability. – The Department may file a certificate of tax liability to

collect a tax that is owed by a taxpayer and is collectible under G.S. 105-241.22. A certificate of

tax liability must state the taxpayer's name and the type and amount of tax owed. If the taxpayer

resides in this State or has property in this State, the Department must file the certificate of tax

liability with the clerk of the superior court of a county in which the taxpayer resides or has

property. If the taxpayer does not reside in this State or have property in this State, the

Department must file the certificate of tax liability in Wake County.

The clerk of court must record a certificate of tax liability in the same manner as a judgment.

A recorded certificate of tax liability is considered a judgment and is enforceable in the same

manner as other judgments. The legal rate of interest set in G.S. 24-1 applies to the principal

amount of tax stated on the certificate of tax liability. The tax stated on a certificate of tax

liability is a lien on real and personal property from the date the certificate is recorded.

A certificate of tax liability is enforceable for a period of 10 years from the date it is

recorded. If the certificate is not satisfied within this period, the remaining liability of the

taxpayer is abated and the Department must cancel the certificate. An execution sale initiated

before the end of the 10-year period may be completed after the end of this period, regardless of

whether resales are required because of the posting of increased bids. The Secretary may accept

tax payments made after a certificate has expired, regardless of whether any collection actions

were taken before the certificate expired. A taxpayer may waive the 10-year period for

enforcement of the certificate for either a definite or an indefinite time.

The 10-year period in which a certificate of tax liability is enforceable is tolled during the

following periods:

(1) While the taxpayer is absent from the State. The period is tolled during the

taxpayer's absence plus one year after the taxpayer returns.

(2) Upon the death of the taxpayer. The period is tolled while the taxpayer's estate

is administered plus one year after the estate is closed.

(3) While an action is pending to set aside a conveyance made by the taxpayer as

a fraudulent conveyance.

(4) While an insolvency proceeding against the taxpayer is pending.

(5) During the period of any statutory or judicial bar to the enforcement of the

certificate.

(6) The period for which a taxpayer has waived the 10-year period.

(c1) Release of Lien. – The Secretary shall release the State tax lien on a taxpayer's

property if the liability for which the lien attached has been satisfied. The Secretary may release


the State tax lien on all or part of a taxpayer's property if one or more of the following findings is

made:

(1) The liability for which the lien attached has become unenforceable due to

lapse of time.

(2) The lien is creating an economic hardship due to the financial condition of the

taxpayer.

(3) The fair market value of the property exceeds the tax liability and release of

the lien on part of the property would not hinder collection of the liability.

(4) Release of the lien will probably facilitate, expedite, or enhance the State's

chances for ultimately collecting a tax due the State.

If the Secretary of Revenue shall find that it will be for the best interest of

the State in that it will probably facilitate, expedite or enhance the State's

chances for ultimately collecting a tax due the State, he may authorize a

deputy or agent to release the lien of a State tax judgment or certificate of tax

liability upon a specified parcel or parcels of real estate by noting such release

upon the judgment docket where such certificate of tax liability is recorded.

Such release shall be signed by the deputy or agent and witnessed by the clerk

of court or his deputy or assistant and shall be in substantially the following

form: "The lien of this judgment upon (insert here a short description of the

property to be released sufficient to identify it, such as reference to a

particular tract described in a recorded instrument) is hereby released, but this

judgment shall continue in full force and effect as to other real property to

which it has heretofore attached or may hereafter attach. This __ day of ___,

____

____________________________________________

Revenue Officer, N.C. Department of Revenue

WITNESS:

______________________________________ 42 C.S.C."

The release shall be noted on the judgment docket only upon conditions prescribed by the

Secretary and shall have effect only as to the real estate described therein and shall not affect any

other rights of the State under said judgment.

(d) Remedies Cumulative. – The remedies herein given are cumulative and in addition to

all other remedies provided by law for the collection of said taxes.

(e) Exempt Property. – Only the following property is exempt from levy, attachment, and

garnishment under this Article:

(1) The taxpayer's principal residence, unless the Secretary approves of the levy

in writing or the Secretary finds that collection of the tax is in jeopardy.

(2) Tangible personal property that is exempt from federal levy as provided in


(3) Intangible personal property that is exempt from federal levy under section

6334 of the Code.

(4) Ninety percent (90%) of the taxpayer's salary or wages per month.

(f) Uneconomical Levy. – The Secretary shall not levy against any property if the

Secretary estimates before levy that the expenses the Department would incur in levying against

the property would exceed the fair market value of the property.


(g) Erroneous Lien. – A taxpayer may appeal to the Secretary after a certificate is filed

under subsection (c) of this section if the taxpayer alleges an error in the filing of the lien. The

Secretary shall make a determination of such an appeal as quickly as possible. If the Secretary

finds that the filing of the certificate was erroneous, the Secretary shall withdraw the lien as

quickly as possible by issuing a certificate of withdrawal. (1939, c. 158, s. 913; 1941, c. 50, s.

10; 1949, c. 392, s. 6; 1951, c. 643, s. 9; 1955, c. 1285; c. 1350, s. 23; 1957, c. 1340, s. 10; 1959,

c. 368; 1963, c. 1169, s. 6; 1969, c. 1071, s. 1; 1973, c. 476, s. 193; c. 1287, s. 13; 1979, c. 103,

ss. 1, 2; c. 179, s. 5; 1979, 2nd Sess., c. 1085, s. 1; 1989, c. 37, s. 6; c. 580; 1991, c. 228, s. 1;

1991 (Reg. Sess., 1992), c. 1007, ss. 12, 13; 1993, c. 532, s. 5; 1997-121, s. 1; 1999-456, s. 59;

2003-349, s. 2; 2007-491, ss. 28, 29, 31; 2010-31, s. 31.8(h); 2014-3, s. 14.17.)

§ 105-242.1. Procedure for attachment and garnishment.

(a) Notice. – G.S. 105-242 specifies when intangible property is subject to attachment

and garnishment. Before the Department attaches and garnishes intangible property in payment

of a tax, the Department must send the garnishee a notice of garnishment. The notice must be

sent in accordance with the methods authorized in G.S. 105-241.20 or, with the agreement of the

garnishee, by electronic means. The notice must contain all of the following information, unless

the notice is an electronic notice subject to subsection (a1) of this section:

(1) The taxpayer's name.

(2) The taxpayer's social security number or federal identification number.

(3) The amount of tax, interest, and penalties the taxpayer owes.

(4) An explanation of the liability of a garnishee for tax owed by a taxpayer.

(5) An explanation of the garnishee's responsibility concerning the notice.

(a1) Electronic Notice. – Before the Department sends an electronic notice of garnishment

to a garnishee, the Department and the garnishee must have an agreement that establishes the

protocol for transmitting the notice and provides the information required under subdivisions (4)

and (5) of subsection (a) of this section. An electronic notice must contain the information

required under subdivisions (1), (2), and (3) of subsection (a) of this section.

(b) Action. – A garnishee must comply with a notice of garnishment or file a written

response to the notice within the time set in this subsection. A garnishee that is a financial

institution must comply or file a response within 20 days after receiving a notice of garnishment.

All other garnishees must comply or file a response within 30 days after receiving a notice of

garnishment. A written response must explain why the garnishee is not subject to garnishment

and attachment.

Upon receipt of a written response, the Department must contact the garnishee and schedule

a conference to discuss the response or inform the garnishee of the Department's position

concerning the response. If the Department does not agree with the garnishee on the garnishee's

liability, the Department may proceed to enforce the garnishee's liability for the tax by sending

the garnishee a notice of proposed assessment in accordance with G.S. 105-241.9.

(c) Release. – A notice of garnishment sent to a financial institution is released when the

financial institution complies with the notice. A notice of garnishment sent to all other garnishees

is released when the Department sends the garnishee a notice of release. A notice of release must

state the name and social security number or federal identification number of the taxpayer to

whom the release applies.

(d) Financial Institution. – As used in this section, the term "financial institution" has the

same meaning as in G.S. 53B-2. (2007-491, s. 30; 2010-31, s. 31.8(i).)


§ 105-242.2. Personal liability when certain taxes not paid.


(1) Business entity. – A corporation, a limited liability company, or a partnership.

(2) Responsible person. – Any of the following:

a. The president, treasurer, or chief financial officer of a corporation.

b. A manager of a limited liability company or a partnership.

c. An officer of a corporation, a member or company official of a limited

liability company, or a partner in a partnership who has a duty to

deduct, account for, or pay taxes listed in subsection (b) of this section.

d. A partner who is liable for the debts and obligations of a partnership

under G.S. 59-45 or G.S. 59-403.

(b) Responsible Person. – Each responsible person in a business entity is personally and

individually liable for the principal amount of taxes that are owed by the business entity and are

listed in this subsection. If a business entity does not pay the amount it owes after the amount

becomes collectible under G.S. 105-241.22, the Secretary may enforce the responsible person's

liability for the amount by sending the responsible person a notice of proposed assessment in

accordance with G.S. 105-241.9. This subsection applies to the following:

(1) All sales and use taxes collected by the business entity upon its taxable

transactions.

(2) All sales and use taxes due upon taxable transactions of the business entity but

upon which it failed to collect the tax, but only if the person knew, or in the

exercise of reasonable care should have known, that the tax was not being

collected.

(3) All taxes due from the business entity pursuant to the provisions of Articles

36C and 36D of Subchapter V of this Chapter and all taxes payable under

those Articles by it to a supplier for remittance to this State or another state.

(4) All income taxes required to be withheld by the business entity.

(c) Repealed by Session Laws 1991 (Regular Session, 1992), c. 1007, s. 15.

(d) Distributions. – An officer, partner, trustee, or receiver of a business entity required to

file a report with the Secretary who has custody of funds of the entity and who allows the funds

to be paid out or distributed to the owners of the entity without having remitted to the Secretary

any State taxes that are due is personally liable for the payment of the tax. The Secretary may

enforce an individual's liability under this subsection by sending the individual a notice of

proposed assessment in accordance with G.S. 105-241.9.

(e) Statute of Limitations. – The period of limitations for assessing a responsible person

for unpaid taxes under this section expires one year after the expiration of the period of

limitations for assessing the business entity. (1939, c. 158, s. 923; 1941, c. 50, s. 10; 1955, c.

1350, s. 23; 1973, c. 476, s. 193; c. 1287, s. 13; 1983, c. 220, s. 1; 1991, c. 690, s. 7; 1991 (Reg.

Sess., 1992), c. 1007, s. 15; 1995, c. 390, s. 15; 1995 (Reg. Sess., 1996), c. 647, s. 52; 1997-6, s.

9; 1998-212, s. 29A.14(p); 1999-337, s. 34; 2007-491, s. 34; 2008-134, s. 10(a); 2013-414, s.

56(a); 2014-3, s. 14.18.)

§ 105-243. Taxes recoverable by action.

When requested by the Secretary, the Attorney General must bring an action to recover the

amount of tax that is due from a taxpayer and is collectible under G.S. 105-241.22. In the action,


the taxpayer may not challenge the liability for the tax. A judgment in the action has the same

priority as a tax lien. The judgment is not subject to a claim for a homestead exemption. The

action must be brought in one of the following:

(1) The Superior Court of Wake County.

(2) The taxpayer's county of residence.

(3) A county where the taxpayer owns real property.

(4) The county in which the taxpayer has its principal place of business.

(5) A court of competent jurisdiction of another state. (1939, c. 158, s. 914; 1973,

c. 476, s. 193; 2007-491, s. 32.)

§ 105-243.1. Collection of tax debts.


(1) Overdue tax debt. – Any part of a tax debt that remains unpaid 90 days or

more after it becomes collectible under G.S. 105-241.22. The term does not

include a tax debt for which the taxpayer entered into an installment

agreement for the tax debt under G.S. 105-237 within 90 days after the tax

debt became collectible, if the taxpayer has not failed to make any payments

due under the installment agreement.

(2) Tax debt. – The total amount of tax, penalty, and interest collectible under

G.S. 105-241.22.

(b) Outsourcing. – The Secretary may contract for the collection of tax debts owed by

nonresidents and foreign entities. At least 30 days before the Department submits a tax debt to a

contractor for collection, the Department must notify the taxpayer by mail that the debt may be

submitted for collection if payment is not received within 30 days after the notice was mailed.

(b1) [Outsourcing Limitation. –] In determining the liability of any person for a tax, the

Secretary may not employ an agent who is compensated in whole or in part by the State for

services rendered on a contingent basis or any other basis related to the amount of tax, interest,

or penalty assessed against or collected from the person.

(c) Secrecy. – A contract for the collection of tax debts is conditioned on compliance

with G.S. 105-259. If a contractor violates G.S. 105-259, the contract is terminated, and the

Secretary must notify the contractor of the termination. A contractor whose contract is

terminated for violation of G.S. 105-259 is not eligible for an award of another contract under

this section for a period of five years from the termination. These sanctions are in addition to the

criminal penalties set out in G.S. 105-259.

(d) Fee. – A collection assistance fee is imposed on an overdue tax debt that remains

unpaid 30 days or more after the fee notice required by this subsection is mailed to the taxpayer.

In order to impose a collection assistance fee on a tax debt, the Department must notify the

taxpayer that the fee will be imposed if the tax debt is not paid in full within 30 days after the

date the fee notice was mailed to the taxpayer. The Department may not mail the fee notice

earlier than 60 days after the tax debt becomes collectible under G.S. 105-241.22. The fee is

collectible as part of the debt. The Secretary may waive the fee pursuant to G.S. 105-237 to the

same extent as if it were a penalty.

The amount of the collection assistance fee is twenty percent (20%) of the amount of the

overdue tax debt. If a taxpayer pays only part of an overdue tax debt, the payment is credited

proportionally to fee revenue and tax revenue.


(e) Use. – The fee is a receipt of the Department and must be applied to the costs of

collecting and reducing the incidence of overdue tax debts. The proceeds of the fee must be

credited to a special account within the Department and may be expended only as provided in

this subsection. The proceeds of the fee may not be used for any purpose that is not directly and

primarily related to collecting and reducing the incidence of overdue tax debts. The Department

may apply the proceeds of the fee for the purposes listed in this subsection. The remaining

proceeds of the fee may be spent only pursuant to appropriation by the General Assembly. The

fee proceeds do not revert but remain in the special account until spent for the purposes listed in

this subsection. The Department and the Office of State Budget and Management must account

for all expenditures using accounting procedures that clearly distinguish costs allocable to the

purposes listed in this subsection from costs allocab

le to other purposes and must demonstrate that none of the fee proceeds are used for any other

purpose.

The Department may apply the fee proceeds for the following purposes:

(1) To pay (i) contractors for collecting overdue tax debts under subsection (b) of

this section and (ii) auditors responsible for identifying overdue tax debts.

(2) To pay the fee the United States Department of the Treasury charges for setoff

to recover tax owed to North Carolina.

(3) To pay for taxpayer locator services, not to exceed three hundred fifty

thousand dollars ($350,000) a year.

(4) To pay for postage or other delivery charges for correspondence directly and

primarily relating to collecting overdue tax debts, not to exceed seven hundred

fifty thousand dollars ($750,000) a year.

(5) To pay for operating expenses for Project Collection Tax and the Taxpayer

Assistance Call Center.

(6) To pay for expenses of the Examination and Collection Division directly and

primarily relating to collecting overdue tax debts.

(7) To pay the direct and indirect expenses of information technology upgrades to

the Department of Revenue computer systems that are intended to upgrade

Department of Revenue capabilities to (i) allow for electronic filing of returns

by taxpayers and the electronic issuance of refunds by the Department for all

remaining tax schedules and (ii) accomplish other mission-critical information

technology tasks of the Department as approved by the Office of State Budget

and Management in consultation with the State CIO.

(f) Reports. – The report of Department activities required by G.S. 105-256 contains

information on the Department's efforts to collect tax debts and its use of the proceeds of the

collection assistance fee. (2001-380, ss. 2, 8; 2002-126, s. 22.2; 2003-349, s. 3; 2004-124, ss.

23.2(a), 23.3(c); 2004-170, s. 22.5; 2005-276, ss. 22.1(a), 22.1(b), 22.6(a); 2006-66, ss. 19.2,

19.3(a); 2007-323, s. 6.9(a); 2007-491, s. 33; 2012-152, s. 1; 2012-194, s. 61.5(b); 2014-3, s.

10.1(d); 2014-100, s. 26.1; 2015-109, s. 1; 2015-241, s. 28.2.)

§ 105-244: Repealed by Session Laws 1998-212, s. 29A.14(o).

§ 105-244.1. Cancellation of certain assessments.

The Secretary of Revenue is hereby authorized, empowered and directed to cancel and abate

all assessments made after October 16, 1940, for or on account of any tax owing to the State of


North Carolina and which is payable to the Department of Revenue against any person who was

killed while a member of the Armed Forces of the United States or who has a service connected

disability as a result of which the United States is paying him disability compensation. This

provision shall apply only to assessments made after October 16, 1940, for taxes which were due

prior to the time the taxpayer was inducted into the Armed Forces of the United States. If any

such assessment is or has been paid, the Secretary of Revenue may refund the amount paid but

shall not add thereto any interest. (1949, c. 392, s. 6; 1973, c. 476, s. 193; 2011-183, s. 73.)

§ 105-244.2: Expired pursuant to its own terms, effective January 1, 2010.

§ 105-245. Failure of sheriff to execute order.

If any sheriff of this State shall willfully fail, refuse, or neglect to execute any order directed

to him by the Secretary of Revenue and within the time provided in this Subchapter, the official

bond of such sheriff shall be liable for the tax, penalty, interest, and cost due by the taxpayer.

(1939, c. 158, s. 916; 1973, c. 476, s. 193.)

§ 105-246. Actions, when tried.

All actions or processes brought in any of the superior courts of this State, under provisions

of this Subchapter, shall have precedence over any other civil causes pending in such courts, and

the courts shall always be deemed open for trial of any such action or proceeding brought

therein. (1939, c. 158, s. 917.)

§ 105-247. Municipalities not to levy income and inheritance tax.

No city, town, township, or county shall levy any tax on income or inheritance. (1939, c. 158,

s. 918.)

§ 105-248. Purpose of State taxes.

The taxes levied in this Subchapter are for the expenses of the State government, the

appropriations to its educational, charitable, and penal institutions, the interest on the debt of the

State, the public schools, and other specific appropriations made by law, and shall be collected

and paid into the General Fund. (1939, c. 158, s. 919; 1981, c. 3; 1993 (Reg. Sess., 1994), c. 745,

s. 17.)




§ 105-249.2. Due date extended and penalties waived for certain military personnel or

persons affected by a presidentially declared disaster.

(a) Combat. – The Secretary may not assess interest or a penalty against a taxpayer for

any period that is disregarded under section 7508 of the Code in determining the taxpayer's

liability for a federal tax. A taxpayer is granted an extension of time to file a return or take

another action concerning a State tax for any period during which the Secretary may not assess

interest or a penalty under this section.


(b) Disaster. – The penalties in G.S. 105-236(a)(2), (3), and (4) may not be assessed for

any period in which the time for filing a federal return or report or for paying a federal tax is

extended under section 7508A of the Code because of a presidentially declared disaster. For the

purpose of this section, "presidentially declared disaster" has the same meaning as in section

1033(h)(3) of the Code. (1967, c. 706, s. 1; 1991, c. 439, s. 1; 1991 (Reg. Sess., 1992), c. 922, s.

10; 2001-87, s. 1; 2001-414, s. 24; 2006-162, s. 18; 2008-187, s. 16.)


§ 105-250. Law applicable to foreign corporations.

All foreign corporations, and the officers and agents thereof, doing business in this State,

shall be subject to all the liabilities and restrictions that are or may be imposed upon corporations

of like character, organized under the laws of this State, and shall have no other or greater

powers. (1939, c. 158, s. 920.)

§ 105-250.1. Repealed by Session Laws 1981 (Regular Session, 1982), c. 1209.

§ 105-251. Information required of taxpayer and corrections based on information.

(a) Scope of Information. – A taxpayer must give information to the Secretary when the

Secretary requests the information. The Secretary may request a taxpayer to provide only the

following kinds of information on a return, a report, or otherwise:

(1) Information that identifies the taxpayer.

(2) Information needed to determine the liability of the taxpayer for a tax.

(3) Information needed to determine whether an item is subject to a tax.

(4) Information that enables the Secretary to collect a tax.

(5) Other information the law requires a taxpayer to provide or the Secretary

needs to perform a duty a law requires the Secretary to perform.

(b) Correction of Liability. – When a taxpayer provides information to the Secretary

within the statute of limitations and the information establishes that an assessment against the

taxpayer is incorrect or that the taxpayer is allowed a refund, the Secretary must adjust the

assessment or issue the refund in accordance with the information. This action is a correction of

an error by the Department or by the taxpayer and is not part of the process for the administrative

or judicial review of a proposed assessment or a claim for refund. (1939, c. 158, s. 921; 1973, c.

476, s. 193; 1993 (Reg. Sess., 1994), c. 661, s. 2; 2008-134, s. 71.)


§ 105-251.2. (Effective July 1, 2016) Compliance information requests.

(a) Occupational Licensing Board. – An occupational licensing board must give

information to the Secretary when the Secretary requests the information. The Secretary may not

request the information more than one time per calendar year. The Secretary may request the

board to provide on a return, a report, or otherwise, a licensee's name, license number, tax

identification number, business address, and any other information pertaining to the licensee in

possession of the board that the Secretary deems necessary to determine the licensee's

compliance with this Chapter. For purposes of this subsection, the term "occupational licensing

board" has the same meaning as defined in G.S. 93B-1.


(b) Alcohol Vendor. – An alcohol vendor must give information to the Secretary when

the Secretary requests the information. The Secretary may not request the information more than

one time per calendar year. The Secretary may request the alcohol vendor to provide on a return,

a report, or otherwise, for a permittee to which the alcohol vendor provides alcohol, a permittee's

name, license number, and business address and any other information pertaining to the

permittee in possession of the alcohol vendor that the Secretary deems necessary to determine

the pemittee's compliance with this Chapter. This subsection applies to the following alcohol

vendors:

(1) An ABC store in the ABC system, as defined in G.S. 18B-101.

(2) A wine wholesaler, as defined in G.S. 18B-1201.

(3) A wholesaler, as defined in G.S. 18B-1301.

(4) The holder of an unfortified winery permit, a fortified winery permit, a

brewery permit, or a distillery permit under G.S. 18B-1100. (2015-259, s.

7.3(a).)

§ 105-252. Returns required.

A person who receives from the Secretary any form requiring information shall fill the form

out properly and answer each question fully and correctly. If unable to answer a question, the

person shall explain why in writing. The person shall return the form to the Secretary at the time

and place required by the Secretary. The person shall also furnish an oath or affirmation

verifying the return; the oath or affirmation shall be in the form required by the Secretary. (1939,

c. 158, s. 922; 1973, c. 476, s. 193; 1991 (Reg. Sess., 1992), c. 930, s. 5.)

§ 105-253: Recodified as G.S. 105-242.2 by Session Laws 2008-134, s. 10(a), effective July 1,

2008, and applicable to taxes that become collectible on or after that date.

§ 105-254. Secretary to furnish forms.

The Secretary shall prepare forms suitable for carrying out the duties delegated to the

Secretary. Upon request, the Secretary shall provide forms to any person subject to the laws

administered by the Secretary. Failure to receive or secure a form does not relieve a person from

a duty to file a return or a report. (1939, c. 158, s. 924; 1973, c. 476, s. 193; 1991 (Reg. Sess.,

1992), c. 930, s. 6.)

§ 105-255. Secretary of Revenue to keep records.

The Secretary of Revenue shall keep books of account and records of collections of taxes as

may be prescribed by the Director of the Budget; shall keep an assessment roll for the taxes

levied, assessed, and collected under this Subchapter, showing in same the name of each

taxpayer, the amount of tax assessed against each, when assessed, the increase or decrease in

such assessment; the penalties imposed and collected, and the total tax paid; and shall make

monthly reports to the Director of the Budget and to the Auditor and/or State Treasurer of all

collections of taxes on such forms as prescribed by the Director of the Budget. (1939, c. 158, s.

925; 1973, c. 476, s. 193.)

§ 105-256. Publications prepared by Secretary of Revenue; report on fraud prevention

progress.

(a) Publications. – The Secretary shall prepare and publish the following:


(1) At least every two years, statistics concerning taxes imposed by this Chapter,

including amounts collected, classifications of taxpayers, geographic

distribution of taxes, and other facts considered pertinent and valuable.

(2) At least every two years, a tax expenditure report that lists the tax

expenditures made by a provision in this Chapter, other than a provision in

Subchapter II, and gives an estimate of the amount by which revenue is

reduced by each tax expenditure. A "tax expenditure" is an exemption, an

exclusion, a deduction, an allowance, a credit, a refund, a preferential tax rate,

or another device that reduces the amount of tax revenue that would otherwise

be available to the State. An estimate of the amount by which revenue is

reduced by a tax expenditure may be stated as ranging between two amounts

if the Department does not have sufficient data to make a more specific

estimate.

(2a) By May 1 of each year, an economic incentives report that contains

information on tax credits and tax refunds, itemized by credit or refund and by

taxpayer, for the previous calendar year.

(3) As often as required, a report that is not listed in this subsection but is required

by another law.

(4) As often as the Secretary determines is needed, other reports concerning taxes

imposed by this Chapter.

(5) At least once a year, a statement of the taxpayer's bill of rights, which sets

forth in simple and nontechnical terms the following:

a. The taxpayer's right to have the taxpayer's tax information kept

confidential.

b. The rights of a taxpayer and the obligations of the Department during

an audit.

c. The procedure for a taxpayer to appeal an adverse decision of the

Department at each level of determination.

d. The procedure for a taxpayer to claim a refund for an alleged

overpayment.

e. The procedure for a taxpayer to request information, assistance, and

interpretations or to make complaints.

f. Penalties and interest that may apply and the basis for requesting

waiver of a penalty.

g. The procedures the Department may use to enforce the collection of a

tax, including assessment, jeopardy assessment, enforcement of liens,

and garnishment and attachment.

(6) On an annual basis, a report on the quality of services provided to taxpayers

through the Taxpayer Assistance Call Center, walk-in assistance, and taxpayer

education. The report must be submitted to the Joint Legislative Commission

on Governmental Operations.


(8) By January 1 and July 1 of each year, a semiannual report on the Department's

activities listed in this subdivision. The report must be submitted to the Joint

Legislative Commission on Governmental Operations and to the Revenue

Laws Study Committee.


a. Its efforts to increase compliance with the tax laws. The report must

describe the Department's existing initiatives in this area as of July 1,

2006, and must estimate, by tax type and amount, the revenue

expected in the fiscal year by the initiative. The report must describe

any new initiative implemented since July 1, 2006, and estimate, by

tax type and amount, the revenue expected in the fiscal year by the

initiative.

b. Its efforts to identify and address fraud and other abuses of the

voluntary tax compliance system that result in unreported and

underreported tax. The report must describe the Department's

long-term plan for achieving greater voluntary compliance and must

summarize the steps taken since the last report and their results.

c. Its efforts to collect tax debts. The report must include a breakdown of

the amount and age of tax debts collected through warning letters and

by other means, must itemize collections by type of tax, must describe

the Department's long-term collection plan, and must summarize the

steps taken since the last report and their results.

d. Its use of the proceeds of the collection assistance fee imposed by G.S.

105-243.1.

(9) Repealed by Session Laws 2013-416, s. 18(a), effective August 23, 2013.

(a1) [Fraud Prevention Progress Reports. –] Beginning March 1, 2016, and every six

months thereafter, the Department of Revenue and the Government Data Analytics Center must

make written progress reports to the Revenue Laws Study Committee on the following:

(1) Prevention or reduction of the occurrence of stolen identities and refund fraud.

(2) Elimination of fraudulent returns.

(3) Tax compliance by business professionals and alcohol vendors.

(4) Coordination of efforts between the Department of Revenue and the

Government Data Analytics Center to identify and integrate into the

Department's operations and procedures the most effective and accurate

processes and scalable tools available to reduce refund fraud, payment of

fraudulent returns, and business tax compliance.

(b) Information. – The Secretary may require a unit of State or local government to

furnish the Secretary statistical information the Secretary needs to prepare a report under this

section. Upon request of the Secretary, a unit of government shall submit statistical information

on one or more forms provided by the Secretary.

(c) Distribution. – The Secretary shall distribute reports prepared by the Secretary as

follows without charge:

(1) Five copies to the Division of State Library of the Department of Natural and

Cultural Resources, as required by G.S. 125-11.7.

(2) Five copies to the Legislative Services Commission for the use of the General

Assembly.

(3) Upon request, one copy to each entity and official to which a copy of the

reports of the Appellate Division of the General Court of Justice is furnished

under G.S. 7A-343.1.


(4) One copy of the tax expenditure report to each member of the General

Assembly and, upon request, one copy of any other report to each member of

the General Assembly.

(5) One copy of the taxpayer's bill of rights to each taxpayer the Department

contacts regarding determination or collection of a tax, other than by

providing a tax form.

(6) Upon request, one copy of the taxpayer's bill of rights to each taxpayer.

The Secretary may charge a person not listed in this subsection a fee for a report prepared by

the Secretary in an amount that covers publication or copying costs and mailing costs.

(d) Other Requirements. – The following requirements apply to the Secretary:

(1) Repealed by Session Laws 2006-6, s. 10, effective July 1, 2007.

(2) Escheats. – G.S. 116B-60(g) requires the Secretary to furnish information to

the Escheat Fund on October 1 of each year.

(e) Repealed by Session Laws 2004-124, s. 23.3(b), effective July 1, 2004. (1939, c.

158, s. 926; 1955, c. 1350, s. 8; 1973, c. 476, s. 193; 1991, c. 10, s. 1; 1991 (Reg. Sess., 1992), c.

1007, s. 16; 1993, c. 433, s. 1; c. 532, s. 6; 2001-414, ss. 25, 26; 2002-87, s. 8; 2002-126, s. 22.5;

2004-124, s. 23.3(b); 2006-6, s. 10; 2006-66, s. 19.3(b); 2007-491, ss. 35, 36; 2010-166, s. 1.21;

2011-330, ss. 33(a), 35; 2013-414, s. 18(a); 2015-241, s. 14.30(s); 2015-259, s. 7.3(b).)

§ 105-256.1. Corporate annual report.

A corporation that files its annual report with the Secretary must pay the amount provided in

G.S. 55-1-22 when it files the report. Amounts collected under this section shall be credited to

the General Fund as tax revenue. The Secretary must transmit an annual report filed with the

Secretary in accordance with G.S. 55-16-22 to the Secretary of State. (1997-475, s. 6.10.)

§ 105-257. Department may charge fee for report or other document.

The Secretary of Revenue may charge a fee for a report or another document in an amount

that covers copying or publication costs and mailing costs. (1933, c. 88, s. 2; 1955, c. 1350, s. 9;

1973, c. 476, s. 193; 1991, c. 10, s. 2.)

§ 105-258. Powers of Secretary of Revenue; who may sign and verify legal documents; who

may serve civil papers.

(a) Secretary May Examine Data and Summon Persons. – The Secretary of Revenue is

authorized to do any of the following for the purpose of ascertaining the correctness of any

return, filing a return where none has been filed, or determining the liability of any person for a

tax, or collecting any tax:

(1) Examine, personally, or by an agent designated by him, any books, papers,

records, or other data that may be relevant or material to the inquiry.

(2) Summon any of the following persons to appear at a time and place named in

the summons, to produce such books, papers, records, or other data, and to

give such testimony under oath as may be relevant or material to the inquiry:

a. Any person liable for the tax or required to perform the act, or any

officer or employee of such person.

b. Any person having possession, custody, care or control of books of

account containing entries relevant or material to the income and


expenditures of the person liable for the tax or required to perform the

act, or any other person having knowledge in the premises.

(3) Administer oaths to the persons listed in this subsection.

(4) Apply to the Superior Court of Wake County for an order requiring any

person who refuses to obey the summons or to give testimony when

summoned. Failure to comply with the court order shall be punished as for

contempt.

(b) Department Employees May Sign and Verify Legal Documents. – In a matter to

which the Secretary of Revenue is a party or in which the Secretary has an interest, all legal

documents may be signed and verified on behalf of the Secretary by (i) a Deputy or Assistant

Secretary; (ii) any director or assistant director of any division of the Department of Revenue; or

(iii) any other agent or employee of the Department so authorized by the Secretary of Revenue.

(c) Department Employees May Serve Civil Papers. – In a civil matter to which the

Secretary of Revenue is a party or in which the Secretary has an interest, any agent or employee

of the Department of Revenue may serve summonses and other legal documents lawfully issued

when so authorized by the Secretary of Revenue. (1939, c. 158, s. 927; 1943, c. 400, s. 9; 1955,

c. 435; 1959, c. 1259, s. 8A; 1973, c. 476, s. 193; 1987 (Reg. Sess., 1988), c. 1044, s. 1; 1991, c.

157, s. 1; 2007-527, s. 15; 2013-414, s. 1(i).)

§ 105-258.1. Taxpayer interviews.

(a) Scope. – This section applies to in-person interviews between a taxpayer and an

officer or employee of the Department relating to the determination or collection of a tax, other

than an in-person interview concerning any of the following:

(1) A criminal investigation.

(2) The determination or collection of a tax imposed by Article 2D of this

Chapter.

(3) Repealed by Session Laws 2007-491, s. 37, effective January 1, 2008.

(4) A jeopardy assessment and collection.

(b) Recording of Interview. – The Department shall allow a taxpayer to make an audio

recording of an interview at the taxpayer's expense and using the taxpayer's equipment. The

Department may make an audio recording of an interview at its own expense and using its own

equipment. The Department shall, upon request of the taxpayer, provide the taxpayer a transcript

of an interview recorded by the Department; the Department may charge the taxpayer for the

cost of the requested transcription and reproduction of the transcript.

(c) Disclosure of Procedure. – At or before an initial interview relating to the

determination of a tax, the Department shall provide the taxpayer a written explanation of the

audit process and the taxpayer's rights in the process. At or before an initial interview relating to

the collection of a tax, the Department shall provide the taxpayer a written explanation of the

collection process and the taxpayer's rights in the process.

(d) Right of Consultation. – A taxpayer may authorize a person to represent the taxpayer

in an interview if the person has a written power of attorney executed by the taxpayer. The

Department may not require a taxpayer to accompany the taxpayer's representative to the

interview unless the Secretary has summoned the taxpayer pursuant to G.S. 105-258.

(e) Suspension of Interview. – The Department shall suspend an interview relating to the

determination of a tax if the taxpayer is not accompanied by a representative and, at any time


during the interview, expresses the desire to consult with another person. (1993, c. 532, s. 7;

1993 (Reg. Sess., 1994), c. 745, s. 18; 2007-491, s. 37.)

§ 105-258.2. Taxpayer conversations.

(a) Scope. – This section applies to a conversation that is conducted by telephone or in

person, is between a taxpayer and an employee of the Department, and occurs at an office of the

Department if the conversation is in person. It does not apply to a conversation that occurs at a

presentation, a conference, or another forum.

(b) Documentation. – The Secretary must document advice given to a taxpayer in a

conversation with that taxpayer when the taxpayer gives the Secretary the taxpayer's identifying

information, asks the Secretary about the application of a tax to the taxpayer in specific

circumstances, and requests that the Secretary document the advice in the taxpayer's records. The

documentation may be an entry in the account record of the taxpayer or by another method

determined by the Secretary. The documentation must set out the date of the conversation, the

question asked, and the advice given.

(c) Sales Tax Inquiries. – The Secretary must document advice given in a conversation

with a person who is not registered as a retailer or a wholesale merchant under Article 5 of this

Chapter when the person gives the Secretary the person's name and address, describes a business

in which the person is engaged, asks if the person is required to be registered under Article 5 of

this Chapter, and requests that the Secretary document the advice. The Secretary must keep a

record of the person's inquiry that sets out the date of the conversation, the person making the

inquiry, the business described in the conversation, and the advice given. (2008-107, s. 28.16(c),

(d).)

§ 105-259. Secrecy required of officials; penalty for violation.


(1) Employee or officer. – The term includes a former employee, a former officer,

and a current or former member of a State board or commission.

(2) Tax information. – Any information from any source concerning the liability

of a taxpayer for a tax, as defined in G.S. 105-228.90. The term includes the

following:

a. Information contained on a tax return, a tax report, or an application

for a license for which a tax is imposed.

b. Information obtained through an audit of a taxpayer or by

correspondence with a taxpayer.

c. Information on whether a taxpayer has filed a tax return or a tax report.

d. A list or other compilation of the names, addresses, social security

numbers, or similar information concerning taxpayers.

The term does not include (i) statistics classified so that information about

specific taxpayers cannot be identified, (ii) an annual report required to be

filed under G.S. 55-16-22 or (iii) the amount of tax refunds paid to a

governmental entity listed in G.S. 105-164.14(c) or to a State agency.

(b) Disclosure Prohibited. – An officer, an employee, or an agent of the State who has

access to tax information in the course of service to or employment by the State may not disclose

the information to any other person except as provided in this subsection. Standards used or to be

used for the selection of returns for examination and data used or to be used for determining the


standards may not be disclosed for any purpose. All other tax information may be disclosed only

if the disclosure is made for one of the following purposes:

(1) To comply with a court order, an administrative law judge's order in a

contested tax case, or a law.

(2) Review by the Attorney General or a representative of the Attorney General.

(3) To exchange the following types of information with a tax official of another

jurisdiction if the laws of the other jurisdiction allow it to provide similar tax

information to a representative of this State:

a. Information to aid the jurisdiction in collecting a tax imposed by this

State or the other jurisdiction.

b. Information needed for statistical reports and revenue estimates.

(4) To provide a governmental agency or an officer of an organized association of

taxpayers with a list of taxpayers who have paid a privilege license tax under


(5) To furnish to the chair of a board of county commissioners information on the

county sales and use tax.

(5a) Reserved.

(5b) To furnish to the finance officials of a city a list of the utility taxable gross

receipts and piped natural gas tax revenues attributable to the city under G.S.

105-116.1 and G.S. 105-187.44 or under former G.S. 105-116 and G.S.

105-120.

(5c) To provide the following information to a regional public transportation

authority or a regional transportation authority created pursuant to Article 26

or Article 27 of Chapter 160A of the General Statutes on an annual basis,

when the information is needed to enable the authority to administer its tax

laws:

a. The name, address, and identification number of retailers who collect

the tax on leased vehicles imposed by G.S. 105-187.5.

b. The name, address, and identification number of a retailer audited by

the Department of Revenue regarding the tax on leased vehicles

imposed by G.S. 105-187.5, when the Department determines that the

audit results may be of interest to the authority.

(5d) To provide the following information to a county or city on an annual basis,

when the county or city needs the information for the administration of its

local prepared food and beverages tax, room occupancy tax, vehicle rental tax,

or heavy equipment rental tax:

a. The name, address, and identification number of retailers who collect

the sales and use taxes imposed under Article 5 of this Chapter and

may be engaged in a business subject to one or more of these local

taxes.

b. The name, address, and identification number of a retailer audited by

the Department regarding the sales and use taxes imposed under

Article 5 of this Chapter, when the Department determines that the

audit results may be of interest to the county or city in the

administration of one or more of these local taxes.


(6) To sort, process, or deliver tax information on behalf of the Department of

Revenue.

(6a) To furnish the county or city official designated under G.S. 105-164.29B a list

of claimants that have received a refund of the county sales or use tax to the

extent authorized in that statute.

(7) To exchange information with the State Highway Patrol of the Department of

Public Safety, the Division of Motor Vehicles of the Department of

Transportation, the International Fuel Tax Association, Inc., or the Joint

Operations Center for National Fuel Tax Compliance when the information is

needed to fulfill a duty imposed on the Department of Revenue, the State

Highway Patrol of the Department of Public Safety, or the Division of Motor

Vehicles of the Department of Transportation.

(7a) To furnish the name and identifying information of motor carriers whose

licenses have been revoked to the administrator of a national criminal justice

system database that makes the information available only to criminal justice

agencies and public safety organizations.

(8) To furnish to the Department of State Treasurer, upon request, the name,

address, and account and identification numbers of a taxpayer who may be

entitled to property held in the Escheat Fund.

(9) To furnish to the Division of Employment Security the name, address, and

account and identification numbers of a taxpayer when the information is

requested by the Division in order to fulfill a duty imposed under Article 2 of

Chapter 96 of the General Statutes.

(9a) To furnish information to the Division of Employment Security to the extent

required for its NC WORKS study of the working poor pursuant to G.S.

108A-29(r). The Division of Employment Security shall use information

furnished to it under this subdivision only in a nonidentifying form for

statistical and analytical purposes related to its NC WORKS study. The

information that may be furnished under this subdivision is the following with

respect to individual income taxpayers, as shown on the North Carolina

income tax forms:

a. Name, social security number, spouse's name, spouse's social security

number, and county of residence.

b. Filing status and federal personal exemptions.

c. Federal taxable income, additions to federal taxable income, and total

of federal taxable income plus additional income.

d. Income while a North Carolina resident, total income from North

Carolina sources while a nonresident, and total income from all

sources.

e. Exemption for children, nonresidents' and part-year residents'

exemption for children, and credit for children.

f. Expenses for child and dependent care, portion of expenses paid while

a resident of North Carolina, portion of expenses paid while a resident

of North Carolina that was incurred for dependents who were under

the age of seven and dependents who were physically or mentally

incapable of caring for themselves, credit for child and dependent care


expenses, other qualifying expenses, credit for other qualifying

expenses, total credit for child and dependent care expenses.

(10) Review by the State Auditor to the extent authorized in G.S. 147-64.7.

(11) To give a spouse who elects to file a joint tax return a copy of the return or

information contained on the return.

(11a) To provide a copy of a return to the taxpayer who filed the return.

(11b) In the case of a return filed by a corporation, a partnership, a trust, or an

estate, to provide a copy of the return or information on the return to a person

who has a material interest in the return if, under the circumstances, section

6103(e)(1) of the Code would require disclosure to that person of any

corresponding federal return or information.

(11c) In the case of a return of an individual who is legally incompetent or

deceased, to provide a copy of the return to the legal representative of the

estate of the incompetent individual or decedent.

(12) To contract with a financial institution for the receipt of withheld income tax

payments under G.S. 105-163.6 or for the transmittal of payments by

electronic funds transfer.

(13) To furnish the following to the Fiscal Research Division of the General

Assembly, upon request:

a. A sample, suitable in character, composition, and size for statistical

analyses, of tax returns or other tax information from which taxpayers'

names and identification numbers have been removed.

b. An analysis of the fiscal impact of proposed legislation.

(14) To exchange information concerning a tax imposed by Subchapter V of this

Chapter with the Standards Division of the Department of Agriculture and

Consumer Services when the information is needed to administer the Gasoline

and Oil Inspection Act, Article 3 of Chapter 119 of the General Statutes.

(15) To exchange information concerning a tax imposed by Articles 2A, 2C, or 2D

of this Chapter with one of the following agencies when the information is

needed to fulfill a duty imposed on the Department or the agency:

a. The North Carolina Alcoholic Beverage Control Commission.

b. The Alcohol Law Enforcement Branch of the Department of Public

Safety.

c. The Bureau of Alcohol, Tobacco, and Firearms of the United States

Department of Justice.

d. Law enforcement agencies.

e. The Section of Community Corrections of the Division of Adult

Correction of the Department of Public Safety.

(15a) To furnish to the appropriate local, State, or federal law enforcement agency,

including a prosecutorial agency, information concerning the commission of

an offense under the jurisdiction of that agency when the Department has

initiated a criminal investigation of the taxpayer.

(16) To furnish to the Department of Secretary of State the name, address, tax year

end, and account and identification numbers of a corporation liable for

corporate income or franchise taxes or of a limited liability company liable for

a corporate or a partnership tax return to enable the Secretary of State to notify


the corporation or the limited liability company of the annual report filing

requirement or that its articles of incorporation or articles of organization or

its certificate of authority has been suspended.

(16a) To provide the North Carolina Self-Insurance Security Association

information on self-insurers' premiums as determined under G.S.

105-228.5(b), (b1), and (c) for the purpose of collecting the assessments

authorized in G.S. 97-133(a).

(17) To inform the Business License Information Office of the Department of

Commerce of the status of an application for a license for which a tax is

imposed and of any information needed to process the application.

(18) To furnish to the Office of the State Controller information needed by the

State Controller to implement the setoff debt collection program established

under G.S. 147-86.25, verify statewide vendor files, or track debtors of the

State.

(19) To furnish to the North Carolina Industrial Commission information

concerning workers' compensation reported to the Secretary under G.S.

105-163.7.

(20) (See note for expiration date) To furnish to the Environmental Management

Commission information concerning whether a person who is requesting

certification of a dry-cleaning facility or wholesale distribution facility from

the Commission is liable for privilege tax under Article 5D of this Chapter.

This subdivision is repealed when Part 6 of Article 21A of Chapter 143 of the

General Statutes expires.

(21) To exchange information concerning the tax on piped natural gas imposed by

Article 5E of this Chapter with the North Carolina Utilities Commission or the

Public Staff of that Commission.

(22) To provide the Secretary of Administration pursuant to G.S. 143-59.1 a list of

vendors and their affiliates who meet one or more of the conditions of G.S.

105-164.8(b) but refuse to collect the use tax levied under Article 5 of this

Chapter on their sales delivered to North Carolina.

(23) To provide public access to a database containing the names and account

numbers of taxpayers who are not required to pay sales and use taxes under

Article 5 of this Chapter to a retailer because of an exemption or because they

are authorized to pay the tax directly to the Department of Revenue.

(24) To furnish the Department of Commerce and the Division of Employment

Security a copy of the qualifying information required in G.S. 105-129.7(b) or

G.S. 105-129.86(b).

(25) To provide public access to a database containing the names and registration

numbers of retailers who are registered to collect sales and use taxes under


(26) To contract for the collection of tax debts pursuant to G.S. 105-243.1.

(27) To provide a publication required under this Chapter.

(28) To exchange information concerning a tax credit claimed under Article 3E of

this Chapter with the North Carolina Housing Finance Agency.


(29) To provide to the Economic Investment Committee established pursuant to

G.S. 143B-437.54 information necessary to implement economic development

programs under the responsibility of the Committee.

(30) To prove that a business does not meet the definition of "small business"

under Article 3F of this Chapter because the annual receipts of the business,

combined with the annual receipts of all related persons, exceeds the

applicable amount.


(32) Repealed by Session Laws 2006-162, s. 4(c), as amended by Session Laws

2007-527, s. 24, effective July 24, 2006.

(33) To provide to the North Carolina State Lottery Commission the information

required under G.S. 18C-141.

(34) To exchange information concerning a tax credit claimed under G.S.

105-130.47 or G.S. 105-151.29 with the North Carolina Film Office of the

Department of Commerce and with the regional film commissions.

(34a) To exchange information concerning a grant awarded under G.S.

143B-437.02A with the Department of Revenue, the Department of

Commerce, or a contractor hired by the Department of Commerce and

necessary for the Department to administer the program. A contractor hired

pursuant to this subdivision shall be an agent of the State subject to the

provisions of this statute with respect to any tax information provided.


(36) To furnish to a taxpayer claiming a credit under G.S. 105-130.47 or G.S.

105-151.29 information used by the Secretary to adjust the amount of the

credit claimed by the taxpayer.

(37) To furnish the Department of Commerce with the information needed to

complete the study required under G.S. 105-129.82.

(38) To verify with a nonprofit organization or a unit of State or local government

information relating to eligibility for a credit under G.S. 105-129.16H.

(39) To furnish the Department of State Treasurer with information it requests

about whether a unit of local government has timely filed a withholding

report, has been charged a penalty, or has paid a penalty, as such information

may be helpful in auditing local government accounts pursuant to G.S. 159-34

and determining compliance with the Local Government Finance Act.

(40) To furnish a nonparticipating manufacturer, as defined in G.S. 66-292, the

amount of the manufacturer's tobacco products that a taxpayer sells in this

State and that the Secretary reports to the Attorney General under G.S.

105-113.4C.

(40a) To furnish a data clearinghouse the information required to be released in

accordance with the State's agreement under the December 2012 Term Sheet

Settlement, as finalized by the State in the NPM Adjustment Settlement

Agreement, concerning annual tobacco product sales by a nonparticipating

manufacturer. Such information released to a data clearinghouse may be

released to parties to the NPM Adjustment Settlement Agreement provided

confidentiality protections are agreed to by the parties and overseen and

enforced by this State's applicable court for enforcement of the Master


Settlement Agreement for (i) any state information constituting confidential

tax information or otherwise confidential under state law and (ii) manufacturer

information designated confidential. The following definitions apply in this

subdivision:

a. Data clearinghouse. – Defined in the Term Sheet Settlement and in the

NPM Adjustment Settlement Agreement.

b. Master Settlement Agreement. – Defined in G.S. 66-290.

c. Nonparticipating manufacturer. – Defined in G.S. 66-292.

d. NPM Adjustment Settlement Agreement. – The final executed

settlement document resulting from the 2012 Term Sheet Settlement.

e. Participating manufacturer. – Defined in G.S. 66-292.

f. Term Sheet Settlement. – The settlement agreement entered into in

December 2012 by the State and certain participating manufacturers

under the Master Settlement Agreement.

(41) To furnish the North Carolina Forest Service of the Department of Agriculture

and Consumer Services pertinent contact and financial information concerning

companies that are involved in the primary processing of timber products so

that the Commissioner of Agriculture is able to comply with G.S. 106-1029

under the Primary Forest Product Assessment Act.

(42) To furnish to a taxpayer claiming a credit under G.S. 105-129.16A

information used by the Secretary to adjust the amount of the credit claimed

by the taxpayer.

(43) To furnish requested workforce data to the North Carolina Longitudinal Data

System, as required by G.S. 116E-6. Information furnished to the North

Carolina Longitudinal Data System shall be provided in a nonidentifying form

for statistical and analytical purposes to facilitate and enable the linkage of

student data and workforce data and shall not include information allowing

the identification of specific taxpayers.

(44) To furnish the State Budget Director or the Director's designee a sample of tax

returns or other tax information from which taxpayers' names and

identification numbers have been removed that is suitable in character,

composition, and size for statistical analyses by the Office of State Budget and

Management.

(45) To furnish tax information to the State Chief Information Officer pursuant to

G.S. 143B-1381. The use and reporting of individual data may be restricted to

only those activities specifically allowed by law when potential fraud or other

illegal activity is indicated.

(46) To furnish to a person who provides the State with a bond or irrevocable letter

of credit on behalf of a taxpayer the information necessary for the Department

to collect on the bond or letter of credit in the case of noncompliance with the

tax laws by the taxpayer covered by the bond or letter of credit.

(47) To provide the Alcoholic Beverage Control Commission the information

required under G.S. 18B-900.

(48) To furnish to the Department of Environmental Quality the name, address, tax

year end, and account and identification numbers of an entity liable for

severance tax to enable the Secretary of Environmental Quality to notify the


entity that the Department of Environmental Quality shall suspend permits of

the entity for oil and gas exploration using horizontal drilling and hydraulic

fracturing under G.S. 113-395.

(49) To exchange information concerning a tax imposed by Article 8B of this

Chapter with the North Carolina Department of Insurance when the

information is needed to fulfill a duty imposed on the Department.

(c) Punishment. – A person who violates this section is guilty of a Class 1 misdemeanor.

If the person committing the violation is an officer or employee, that person shall be dismissed

from public office or public employment and may not hold any public office or public

employment in this State for five years after the violation. (1939, c. 158, s. 928; 1951, c. 190, s.

2; 1973, c. 476, s. 193; c. 903, s. 4; c. 1287, s. 13; 1975, c. 19, s. 29; c. 275, s. 7; 1977, c. 657, s.

6; 1979, c. 495; 1983, c. 7; 1983 (Reg. Sess., 1984), c. 1004, s. 3; c. 1034, s. 125; 1987, c. 440, s.

4; 1989, c. 628; c. 728, s. 1.47; 1989 (Reg. Sess., 1990), c. 945, s. 15; 1993, c. 485, s. 31; c. 539,

s. 712; 1994, Ex. Sess., c. 14, s. 51; c. 24, s. 14(c); 1993 (Reg. Sess., 1994), c. 679, s. 8.4; 1995,

c. 17, s. 11; c. 21, s. 2; 1997-118, s. 6; 1997-261, s. 14; 1997-340, s. 2; 1997-392, s. 4.1;

1997-475, s. 6.11; 1998-22, ss. 10, 11; 1998-98, ss. 13.1(b), 20; 1998-139, s. 1; 1998-212, s.

12.27A(o); 1999-219, s. 7.1; 1999-340, s. 8; 1999-341, s. 8; 1999-360, s. 2.1; 1999-438, s. 18;

1999-452, s. 28.1; 2000-120, s. 8; 2000-173, s. 11; 2001-205, s. 1; 2001-380, s. 5; 2001-476, s.

8(b); 2001-487, ss. 47(d), 123; 2002-87, s. 7; 2002-106, s. 5; 2002-172, s. 2.3; 2003-349, s. 4;

2003-416, s. 2; 2004-124, s. 32D.3; 2004-170, s. 23; 2004-204, 1st Ex. Sess., s. 4; 2005-276, ss.

31.1(cc), 39.1(c), 7.27(b); 2005-400, s. 20; 2005-429, s. 2.13; 2005-435, ss. 32(b), 32(c), 37, 48;

2006-162, s. 4(c); 2006-196, s. 11; 2006-252, s. 2.21; 2007-397, s. 13(d); 2007-491, s. 38;

2007-527, ss. 24, 33, 34, 35, 36; 2008-107, s. 28.25(d); 2008-144, s. 4; 2009-283, s. 1; 2009-445,

s. 39; 2009-483, ss. 5, 10; 2010-31, ss. 13.15, 31.8(g); 2010-95, s. 11; 2010-166, s. 3.7;

2010-167, s. 2(c); 2011-145, ss. 19.1(g), (h), (k), (n), (p), 13.25(nn), (xx); 2011-330, s. 33(b);

2011-401, ss. 3.9, 5.1; 2012-83, s. 35; 2012-133, s. 1(b); 2013-155, s. 6; 2013-360, ss. 6.9,

7.10(c); 2013-414, s. 19; 2014-3, ss. 9.3, 10.1(c); 2014-4, s. 17(b); 2014-100, s. 17.1(xxx);

2014-115, s. 56.8(e); 2015-99, s. 2; 2015-241, ss. 6.24(h), 7A.4(h), 14.30(u), (v), 15.25(b),

16A.7(j).)

§ 105-260. Evaluation of Department personnel.

The Secretary may not use records of tax enforcement results, or production goals based on

these records, as the sole criteria in evaluating employees of the Department who are directly

involved in tax collection activities or in evaluating the immediate supervisors of these

employees. The Secretary must consider records of taxpayer complaints that named an

employee as discourteous, unresponsive, or incompetent in evaluating the employee. (1939, c.

158, s. 929; 1973, c. 476, s. 193; 1981, c. 859, s. 79; c. 1127, s. 53; 1993, c. 532, s. 8.)

§ 105-260.1. Delegation of authority to hold hearings.

The Secretary may delegate the authority to hold a hearing required or allowed under this

Chapter. (1985, c. 258; 2014-3, s. 9.4.)

§ 105-261. Secretary and deputies to administer oaths.

The Secretary of Revenue and such deputies as he may designate shall have the power to

administer an oath to any person or to take the acknowledgment of any person in respect to any

return or report required by this Subchapter or under the rules and regulations of the Secretary of


Revenue, and shall have access to all the books and records of any person, firm, corporation,

county, or municipality in this State. (1939, c. 158, s. 930; 1973, c. 476, s. 193.)

§ 105-262. Rules.

(a) Authority. – The Secretary of Revenue may adopt rules needed to administer a tax

collected by the Secretary or to fulfill another duty delegated to the Secretary. G.S. 150B-1 and

Article 2A of Chapter 150B of the General Statutes set out the procedure for the adoption of

rules by the Secretary.

(b) Repealed by Session Laws 2012-43, s. 1, effective June 20, 2012, and Session Laws

2012-79, s. 1.14(d), effective June 26, 2012.

(c) Fiscal Note. – The Secretary must ask the Office of State Budget and Management to

prepare a fiscal note for a proposed new rule or a proposed change to a rule that has a substantial

economic impact, as defined in G.S. 150B-21.4(b1). The Secretary shall not take final action on

a proposed rule change that has a substantial economic impact until at least 60 days after the

fiscal note has been prepared. (1939, c. 158, s. 931; 1955, c. 1350, s. 2; 1973, c. 476, s. 193;

1981, c. 859, s. 80; c. 1127, s. 53; 1991, c. 45, s. 28; c. 477, s. 7; 1995, c. 507, s. 27.8(p);

2000-140, s. 93.1(a); 2001-424, s. 12.2(b); 2007-491, s. 39; 2010-31, s. 31.10(f); 2012-43, s. 1;

2012-79, s. 1.14(d).)

§ 105-262.1. Rules to exercise authority under G.S. 105-130.5A.

(a) Purpose and Scope. – It is the policy of the State to provide necessary guidance on a

timely basis to corporate taxpayers subject under G.S. 105-130.5A to have their net income

adjusted or to be required to file a combined return. Except for a voluntary redetermination as

allowed under G.S. 105-130.5A(c), the Secretary may not redetermine the State net income of a

corporation properly attributable to its business carried on in the State under G.S. 105-130.5A

until a rule adopted by the Secretary in accordance with this section becomes effective. This

section provides an expedited procedure for the adoption of rules needed to administer G.S.

105-130.5A. The Secretary may not interpret G.S. 105-130.5A in the form of a bulletin or

directive under G.S. 105-264.

The Secretary is exempt from G.S. 150B-21.1 through G.S. 150B-21.4 of Part 2 of Article

2A of Chapter 150B of the General Statutes but is subject to the expedited procedure for the

adoption of rules as established by this section. The Secretary is exempt from Part 3 of Article

2A of Chapter 150B of the General Statutes but is subject to the expedited review procedure as

established by this section.

(b) Definitions. – The definitions in G.S. 150B-2 apply in this section.

(c) Fiscal Note. – The Secretary must prepare a fiscal note for a proposed new rule or a

proposed change to a rule that has a substantial economic impact. The fiscal note must be

submitted with the proposed rule when the rule is submitted to the Codifier of Rules, and the

Codifier of Rules must publish the fiscal note with the proposed rule on the Internet. The

Secretary must accept a written comment on the fiscal note in the same manner the Secretary

accepts written comments on the proposed rule. The Secretary is not subject to the fiscal note

requirement under G.S. 105-262(c). For purposes of this section, a "substantial economic

impact" has the same meaning as defined in G.S. 150B-21.4(b1).

(d) Adoption. – The Secretary may adopt a rule under this section by using the procedure

for adoption of a temporary rule set forth in G.S. 150B-21.1(a3). The Secretary must provide

electronic notification of the adoption of a rule to persons on the mailing list maintained in


accordance with G.S. 150B-21.2(d) and any other interested parties, including those originally

given notice of the rule making and those who provided comment on the rule. If the Secretary

receives written comment objecting to the rule and requesting review by the Commission, the

rule must be reviewed in accordance with subsections (e) through (i) of this section. A person

may object to the rule and request review by the Commission at any point following the agency's

adoption of the rule and by 5:00 P.M. on the third business day following electronic notification

from the Secretary of the adoption of a rule. If the Secretary receives no written comment

objecting to the rule and requesting review by the Commission, the Secretary must deliver the

rule to the Codifier of Rules. The Codifier of Rules must enter the rule into the North Carolina

Administrative Code upon receipt of the rule.

(e) Review. – If the Secretary receives written comment objecting to the rule and

requesting review by the Commission, the Secretary must submit the rule to the Commission for

review. The Commission may not consider questions relating to the quality or efficacy of the rule

but must restrict its review to a determination of whether the rule meets all of the following

criteria:

(1) It is within the authority delegated to the agency by the General Assembly.

(2) It is clear and unambiguous.

(3) It is reasonably necessary to implement or interpret an enactment of the

General Assembly, or of Congress, or a regulation of a federal agency. The

Commission must consider the cumulative effect of all rules adopted by the

agency related to the specific purpose for which the rule is proposed.

(4) It was adopted in accordance with this section.

(f) Manner of Review. – When the Commission reviews a rule under this section, the

time limits in subsections (b) and (b1) of G.S. 150B-21.1 apply. The Commission must review

the rule to determine whether the rule meets the standards in subsection (e) of this section. The

Commission must direct a member of its staff who is an attorney licensed to practice law in

North Carolina to review the rule. The staff member must make a recommendation to the

Commission or its designee. The Commission's designee must be a panel of at least three

members of the Commission. The staff member, Commission's designee, or the Commission

may also request technical changes as allowed in G.S. 150B-21.10. In reviewing the rule, the

Commission may consider any information submitted by the Secretary or another person.

(g) Objection. – If the Commission or its designee finds that the rule does not meet the

standards in subsection (e) of this section and objects to the rule, the Commission or its designee

must send the Secretary a written statement of the objection and the reason for the objection

within one business day. The Secretary must take one of the following actions:

(1) Change the rule to satisfy the Commission's objection and submit the revised

rule to the Commission.

(2) Submit a written response to the Commission indicating that the Secretary has

decided not to change the rule.

(h) Changes. – When the Secretary changes a rule in response to an objection by the

Commission, the Commission must determine whether the change satisfies the Commission's

objection. If it does, the Commission must approve the rule. If it does not, the Commission must

send the Secretary a written statement of the Commission's continued objection and the reason

for the continued objection.

(i) Approval. – If the Commission or its designee finds that the rule meets the standards

in subsection (e) of this section, the Commission or its designee must approve the rule and


deliver the rule to the Codifier of Rules. The Codifier of Rules must enter the rule into the North

Carolina Administrative Code upon receipt from the Commission or its designee.

(j) Return of Rule. – A rule to which the Commission has objected remains under review

by the Commission until the Secretary decides not to satisfy the Commission's objection and

makes a written request to the Commission to return the rule to the Secretary. When the

Commission returns a rule to the Secretary in accordance with this section, the Secretary may file

an action for declaratory judgment in Wake County Superior Court pursuant to Article 26 of

Chapter 1 of the General Statutes.

(k) Effective Date. – G.S. 150B-21.3 does not apply to a rule adopted under this section.

A rule adopted under this section becomes effective on the last day of the month the Codifier of

Rules enters the rule in the North Carolina Administrative Code. (2012-43, s. 2; 2013-414, s.

48.)

§ 105-263. Timely filing of mailed documents and requests for extensions.

(a) Mailed Document. – Sections 7502 and 7503 of the Code govern when a return,

report, payment, or any other document that is mailed to the Department is timely filed.

(b) Extension. – The Secretary may extend the time in which a person must file a return

with the Secretary. To obtain an extension of time for filing a return, a person must comply with

any application requirement set by the Secretary. An extension of time for filing a franchise tax

return or an income tax return does not extend the time for paying the tax due or the time when a

penalty attaches for failure to pay the tax. An extension of time for filing any return other than a

franchise tax return or an income tax return extends the time for paying the tax due and the time

when a penalty attaches for failure to pay the tax. When an extension of time for filing a return

extends the time for paying the tax expected to be due with the return, interest, at the rate

established pursuant to G.S. 105-241.21, accrues on the tax due from the original due date of the

return to the date the tax is paid. (1939, c. 158, s. 932; 1973, c. 476, s. 193; 1977, c. 1114, s. 2;

1989 (Reg. Sess., 1990), c. 984, s. 14; 1991 (Reg. Sess., 1992), c. 930, s. 11; 1997-300, s. 1;

2007-491, s. 44(1)a; 2008-107, s. 28.18(c); 2010-95, s. 10(a); 2012-79, s. 1.8; 2013-414, s. 1(j).)

§ 105-264. Effect of Secretary's interpretation of revenue laws.

(a) Interpretation. – It is the duty of the Secretary to interpret all laws administered by the

Secretary. The Secretary's interpretation of these laws shall be consistent with the applicable

rules. An interpretation by the Secretary is prima facie correct. When the Secretary interprets a

law by adopting a rule or publishing a bulletin or directive on the law, the interpretation is a

protection to the officers and taxpayers affected by the interpretation, and taxpayers are entitled

to rely upon the interpretation. If the Secretary changes an interpretation, a taxpayer who relied

on it before it was changed is not liable for any penalty or additional assessment on any tax that

accrued before the interpretation was changed and was not paid by reason of reliance upon the

interpretation.

(b) Advice. – If a taxpayer requests specific advice from the Department and receives

erroneous advice in response, the taxpayer is not liable for any penalty or additional assessment

attributable to the erroneous advice furnished by the Department to the extent that the following

conditions are all satisfied:

(1) The advice was reasonably relied upon by the taxpayer.

(2) The penalty or additional assessment did not result from the taxpayer's failure

to provide adequate or accurate information.


(3) The Department provided the advice in writing or the Department's records

establish that the Department provided erroneous verbal advice.

(c) Revised Interpretations. – This section does not prevent the Secretary from changing

an interpretation, and it does not prevent a change in an interpretation from applying on and after

the effective date of the change. An interpretation that revises a prior interpretation by expanding

the scope of a tax or otherwise increasing the amount of tax due may not become effective

sooner than the following:

(1) For a tax that is payable on a monthly or quarterly basis, the first day of a

month that is at least 90 days after the date the revised interpretation is issued.

(2) For a tax that is payable on an annual basis, the first day of a tax year that

begins after the date the revised interpretation is issued.

(d) Fee. – The Secretary may charge a fee for providing specific written advice at the

request of a taxpayer. The fee is a receipt of the Department and must be applied to the costs of

providing the specific advice. The proceeds of the fee must be credited to a special account

within the Department and do not revert but remain in the special account until spent by the

Department for the costs of providing the specific advice. The Secretary may adopt a tiered fee

structure based on the taxpayer's income or gross receipts, the relative complexity of the advice

requested, or the tax schedule for which advice is requested. The fee shall not be less than one

hundred dollars ($100.00) or more than five thousand dollars ($5,000). The fee may be waived

by the Secretary. (1939, c. 158, s. 933; 1955, c. 1350, s. 4; 1957, c. 1340, s. 14; 1973, c. 476, s.

193; 1991, c. 45, s. 29; 1993, c. 532, s. 9; 1998-98, s. 21; 2008-107, s. 28.16(e); 2010-31, s.

31.7A(a); 2011-390, s. 6.)

§ 105-264.1. Secretary's interpretation applies to local taxes that are based on State taxes.

An interpretation by the Secretary of a law administered by the Secretary applies to a local

law administered by a unit of local government when the local law refers to the State law to

determine the application of the local law. A person who is subject to the local law or the unit of

local government that administers the local law may ask the Secretary for an interpretation of the

State law that determines the application of the local law. An interpretation by the Secretary of a

State law that determines the application of a local law provides the same protections against

liability under the local law that it provides under the State law. (2008-134, s. 12(a).)




§ 105-266.2. Refund of tax paid on substantial income later restored.

This section applies to a taxpayer who is subject to the alternative tax under § 1341(a)(5) of

the Code for the current taxable year because the taxpayer restored an item of income that had

been included in the taxpayer's gross income for an earlier taxable year. For the purpose of

Article 4 of this Chapter, the taxpayer is considered to have made a payment of tax for the

current taxable year on the later of the date the return for the current taxable year was filed or the

date the return was due to be filed. The amount of this payment of tax is (i) the amount the

taxpayer's tax under Article 4 for the earlier taxable year was increased because the item of


income was included in gross income for that year minus (ii) the amount the taxpayer's tax under

Article 4 for the current taxable year was decreased because the item was deductible for that

year. To the extent this payment of tax creates an overpayment, the overpayment is refundable in

accordance with G.S. 105-241.21. (1997-213, s. 1; 2007-491, s. 44(1)c.)



§ 105-268. Reciprocal comity.

The courts of this State shall recognize and enforce liabilities for taxes lawfully imposed by

other states which extend a like comity to this State. (1939, c. 158, s. 938.)

§ 105-268.1. Agreements to coordinate the administration and collection of taxes.

The Secretary of Revenue is hereby authorized, with the approval of the Governor and

Council of State, to enter into agreements with the United States government or any department

or agency thereof, or with a state or any political subdivision thereof, for the purpose of

coordinating the administration and collection of taxes imposed by this State and administered

and collected by said Secretary with taxes imposed by the United States or by any other state or

political subdivision thereof. (1943, c. 747, s. 1; 1971, c. 806, s. 2; 1973, c. 476, s. 193.)

§ 105-268.2. Expenditures and commitments authorized to effectuate agreements.

The Secretary of Revenue with the approval of the Governor and Council of State is

authorized and empowered to undertake such commitments and make such expenditures, within

the appropriations provided by law, as may be necessary to effectuate such agreements. (1943, c.

747, s. 2; 1971, c. 806, s. 2; 1973, c. 476, s. 193.)

§ 105-268.3. Returns to be filed and taxes paid pursuant to agreements.

Notwithstanding any other provision of law, returns shall be filed and taxes paid in

accordance with the provisions of any agreement entered into pursuant to this Article. (1943, c.

747, s. 3; 1971, c. 806, s. 2.)

§ 105-269. Extraterritorial authority to enforce payment.

(a) The Secretary, with the assistance of the Attorney General, is authorized to bring suits

in the courts of other states to collect taxes legally due this State. The officials of other states that

extend a like comity to this State are empowered to sue for the collection of taxes in the courts of

this State. A certificate by the Secretary of State, under the Great Seal of the State, that these

officers have authority to collect the tax is conclusive evidence of this authority. Whenever the

Secretary considers it expedient to employ local counsel to assist in bringing suit in an

out-of-state court, the Secretary, with the concurrence of the Attorney General, may employ local

counsel on the basis of a negotiated retainer or in accordance with prevailing commercial law

league rates.

(b) Repealed by Session Laws 2001-380, s. 4, effective August 20, 2001, and applicable

to tax debts that remain unpaid on or after that date. (1939, c. 158, s. 939; 1963, c. 1169, s. 6;

1973, c. 476, s. 193; 1983 (Reg. Sess., 1984), c. 1005; 2001-380, s. 4.)


§ 105-269.1. Local authorities authorized to furnish office space.

Boards of county commissioners and governing boards of cities and towns are hereby fully

authorized and empowered to furnish adequate and suitable office space for field representatives

of the Department of Revenue upon request of the Secretary of Revenue, and are hereby

authorized and empowered to make necessary expenditures therefor. (1951, c. 643, s. 9; 1973, c.

476, s. 193.)


§ 105-269.3. Enforcement of Subchapter V and fuel inspection tax.

The State Highway Patrol and law enforcement officers and other appropriate personnel in

the Department of Public Safety may assist the Department of Revenue in enforcing Subchapter

V of this Chapter and Article 3 of Chapter 119 of the General Statutes. The State Highway Patrol

and law enforcement officers of the Department of Public Safety have the power of peace

officers in matters concerning the enforcement of Subchapter V of this Chapter and Article 3 of

Chapter 119 of the General Statutes. (1963, c. 1169, s. 6; 1991, c. 42, s. 16; 1991 (Reg. Sess.,

1992), c. 1007, s. 17; 1993, c. 485, s. 15; 1993 (Reg. Sess., 1994), c. 745, s. 19; 2002-159, s.

31.5(b); 2002-190, s. 2; 2011-145, s. 19.1(g).)

§ 105-269.4. Election to apply income tax refund to following year's tax.

Any taxpayer required to file an income tax return under Article 4 of this Subchapter whose

return shows that the taxpayer is entitled to a refund may elect to apply part or all of the refund to

that taxpayer's estimated income tax liability for the following year. The Secretary of Revenue

shall amend the income tax returns to permit the election authorized by this section. (1983, c.

663, s. 1; 1989 (Reg. Sess., 1990), c. 814, s. 28.)

§ 105-269.5. Contribution of income tax refund to Wildlife Conservation Account.

Any taxpayer entitled to a refund of income taxes under Article 4 of this Chapter may elect to

contribute all or part of the refund to the Wildlife Conservation Account established under G.S.

143-247.2 to be used for the management, protection, and preservation of wildlife in accordance

with that statute. The Secretary shall provide appropriate language and space on the income tax

form in which to make the election. The taxpayer's election becomes irrevocable upon filing the

taxpayer's income tax return for the taxable year. The Secretary shall transmit the contributions

made pursuant to this section to the State Treasurer for credit to the Wildlife Conservation

Account. (1983, c. 865, s. 2; 1991, c. 45, s. 20; 1993, c. 543, s. 6.)

§ 105-269.6: Repealed by Session Laws 2002-158, s. 6(a), effective for taxable years



Contribution of income tax refund or payment to the North Carolina Education

Endowment Fund.

Any taxpayer entitled to a refund of income taxes under Article 4 of this Chapter, or any

taxpayer who desires to make a contribution, may elect to contribute all or part of the refund or

may make a contribution to the North Carolina Education Endowment Fund established pursuant

to G.S. 115C-472.16 to be used in accordance with that statute. The Secretary shall provide


appropriate language and space on the income tax form in which to make the election or

contribution. The taxpayer's election or contribution becomes irrevocable upon filing the

taxpayer's income tax return for the taxable year. The Secretary shall transmit the amounts

designated pursuant to this section to the State Treasurer for credit to the North Carolina

Education Endowment Fund. (2014-100, s. 8.11(h).)






§ 105-269.13. Debts not collectible under North Carolina law.

(a) Debts Not Collectible. – The following debts are not collectible and are not subject to

execution under Article 28 of Chapter 1 of the General Statutes or any other provision of law:

(1) A loan made by a person who does not comply with G.S. 105-88.

(2) A debt owed to a retailer described in subsection (b) of this section as the

result of the purchase of tangible personal property.

(b) Retailer. – A debt owed to a retailer is subject to this section if all of the following

applies to the retailer:

(1) The retailer meets one or more of the conditions in G.S. 105-164.8(b).

(2) The retailer is not registered to collect the use tax due under Article 5 of this

Chapter on its sales delivered to an address in North Carolina.

(3) The retailer reported gross sales of at least five million dollars ($5,000,000) on

its most recent federal income tax return.

(c) Assignment. – An assignment to a person of a debt listed in subsection (a) of this

section is subject to the collection restrictions imposed by this section. (2000-120, s. 9.)

§ 105-269.14. Payment of use tax with individual income tax.

(a) Requirement. – An individual who owes use tax that is payable on an annual basis

pursuant to G.S. 105-164.16(d) and who is required to file an individual income tax return under

Part 2 of Article 4 of this Chapter must pay the use tax with the individual income tax return for

the taxable year. The Secretary must provide appropriate space and information on the individual

income tax form and instructions. The information must include the following:

(1) An explanation of an individual's obligation to pay use tax on items purchased

from mail order, Internet, or other sellers that do not collect State and local

sales and use taxes on the items.

(2) A method to help an individual determine the amount of use tax the individual

owes. The method must list categories of items, such as personal computers

and clothing, that are commonly sold by mail order or Internet and must

include a table that gives the average amounts of use tax payable by taxpayers

in various income ranges.


(b) Distribution. – The Secretary must distribute a portion of the net use tax proceeds

collected under this section to counties and cities. The portion to be distributed to all counties

and cities is the total net use tax proceeds collected under this section multiplied by a fraction.

The numerator of the fraction is the local use tax proceeds collected under this section. The

denominator of the fraction is the total use tax proceeds collected under this section. The

Secretary must distribute this portion to the counties and cities in proportion to their total

distributions under Articles 39, 40, 42, and 43 of this Chapter and Chapter 1096 of the 1967

Session Laws for the most recent period for which data are available. The provisions of G.S.

105-472, 105-486, and 105-501 do not apply to tax proceeds distributed under this section.

(1999-341, s. 2; 2000-120, s. 10; 2002-72, s. 20; 2003-284, s. 44.1; 2005-276, s. 33.24;

2007-323, s. 31.16.3(i); 2009-451, s. 27A.3(b), (c); 2010-95, s. 42.)

§ 105-269.15. Income tax credits of partnerships.

(a) Qualification. – A partnership that engages in an activity that is eligible for a tax

credit qualifies for the credit as an entity and then passes through to each of its partners the

partner's distributive share of the credit for which the partnership entity qualifies. Maximum

dollar limits and other limitations that apply in determining the amount of a tax credit available

to a taxpayer apply to the same extent in determining the amount of a tax credit for which the

partnership entity qualifies, with one exception. The exception is a limitation that the tax credit

cannot exceed the amount of tax imposed on the taxpayer.

(b) Allowance of Credit to Partner. – A partner's distributive share of an income tax

credit passed through by a partnership is allowed to the partner only to the extent the partner

would have qualified for the credit if the partner stood in the position of the partnership. All

limitations on an income tax credit apply to each partner to the extent of the partner's distributive

share of the credit, except that a corporate partner's distributive share of an individual income tax

credit is allowed as a corporation income tax credit to the extent the corporate partner could have

qualified for a corporation income tax credit if it stood in the position of the partnership. All

limitations on an income tax credit apply to the sum of the credit passed through to the partner

plus the credit for which the partner qualifies directly.

(c) Determination of Distributive Share. – A partner's distributive share of an income tax

credit shall be determined in accordance with sections 702 and 704 of the Code. (1993 (Reg.

Sess., 1994), c. 674, s. 3; 2001-335, s. 1.)

Article 10.

Liability for Failure to Levy Taxes.

§ 105-270. Repeal of laws imposing liability upon governing bodies of local units.

All laws and clauses of laws, statutes and parts of statutes, imposing civil or criminal liability

upon the governing bodies, of local units, or the members of such governing bodies, for failure to

levy or to vote for the levy of any particular tax or rate of tax for any particular purpose, are

hereby repealed, and said governing bodies and any and all members thereof are hereby freed

and released from any civil or criminal liability heretofore imposed by any law or statute for

failure to levy or to vote for the levy of any particular tax or tax rate for any particular purpose.

(1933, c. 418.)


SUBCHAPTER II. LISTING, APPRAISAL, AND ASSESSMENT OF PROPERTY AND

COLLECTION OF TAXES ON PROPERTY.

Article 11.

Short Title, Purpose, and Definitions.

§ 105-271. Official title.

This Subchapter may be cited as the Machinery Act. (1939, c. 310, s. 1; 1971, c. 806. s. 1.)

§ 105-272. Purpose of Subchapter.

The purpose of this Subchapter is to provide the machinery for the listing, appraisal, and

assessment of property and the levy and collection of taxes on property by counties and

municipalities. It is the intent of the General Assembly to make the provisions of this Subchapter

uniformly applicable throughout the State, and to assure this objective no local act to become

effective on or after July 1, 1971, shall be construed to repeal or amend any section of this

Subchapter in whole or in part unless it shall expressly so provide by specific reference to the

section to be repealed or amended. As used in this section, the term "local act" means any act of

the General Assembly that applies to one or more counties by name, to one or more

municipalities by name, or to all municipalities within one or more named counties. (1939, c.

310, s. 1802; 1971, c. 806, s. 1; 1991, c. 11, s. 1.)

§ 105-273. Definitions.

The following definitions apply in this Subchapter:

(1) Abstract. – The document on which the property of a taxpayer is listed for ad

valorem taxation and on which the appraised and assessed values of the

property are recorded.

(2) Appraisal. – The true value of property or the process by which true value is

ascertained.

(3) Assessment. – The tax value of property or the process by which the

assessment is determined.

(3a) (Effective for taxes imposed for taxable years beginning on or after July

1, 2014 and before July 1, 2016. See note for repeal.) "Builder" means a

taxpayer licensed as a general contractor under G.S. 87-1 and engaged in the

business of buying real property, making improvements to it, and then

reselling it.


1, 2016. See note) "Builder" means a taxpayer engaged in the business of

buying real property, making improvements to it, and then reselling it.



(5) Collector or tax collector. – A person charged with the duty of collecting taxes

for a county or municipality.

(5a) Construction contractor. – A taxpayer who is regularly engaged in building,

installing, repairing, or improving real property.

(6) Corporation. – An organization having capital stock represented by shares or

an incorporated, nonprofit organization.

(6a) Discovered property. – Any of the following:


a. Property that was not listed during a listing period.

b. Property that was listed but the listing included a substantial

understatement.

c. Property that has been granted an exemption or exclusion and does not

qualify for the exemption or exclusion.

(6b) Discover property. – Determine any of the following:

a. Property has not been listed during a listing period.

b. A taxpayer made a substantial understatement of listed property.

c. Property was granted an exemption or exclusion and the property does

not qualify for an exemption or exclusion.

(7) Document. – A book, paper, record, statement, account, map, plat, film,

picture, tape, object, instrument, or any other thing conveying information.

(7a) Failure to list property. – Any of the following:

a. Failure to list property during a listing period.

b. A substantial understatement of listed property.

c. Failure to notify the assessor that property granted an exemption or

exclusion under an application for exemption or exclusion does not

qualify for the exemption or exclusion.

(8) Intangible personal property. – Patents, copyrights, secret processes, formulae,

good will, trademarks, trade brands, franchises, stocks, bonds, cash, bank

deposits, notes, evidences of debt, leasehold interests in exempted real

property, bills and accounts receivable, or other like property.

(8a) Inventories. – Any of the following:

a. Goods held for sale in the regular course of business by manufacturers,

retail and wholesale merchants, and construction contractors. As to

retail and wholesale merchants and construction contractors, the term

includes packaging materials that accompany and become a part of the

goods sold.

b. Goods held by construction contractors to be furnished in the course of

building, installing, repairing, or improving real property.

c. As to manufacturers, raw materials, goods in process, finished goods,

or other materials or supplies that are consumed in manufacturing or

processing or that accompany and become a part of the sale of the

property being sold. The term does not include fuel used in

manufacturing or processing and materials or supplies not used

directly in manufacturing or processing.

d. A modular home as defined in G.S. 105-164.3(21b) that is used

exclusively as a display model and held for eventual sale at the retail

merchant's place of business.

e. Crops, livestock, poultry, feed used in the production of livestock and

poultry, or other agricultural or horticultural products held for sale,

whether in process or ready for sale.

(9) List or listing. – An abstract, when the term is used as a noun.


(10a) Local tax official. – A county assessor, an assistant county assessor, a member

of a county board of commissioners, a member of a county board of


equalization and review, a county tax collector, or the municipal equivalent of

one of these officials.

(10b) Manufacturer. – A taxpayer who is regularly engaged in the mechanical or

chemical conversion or transformation of materials or substances into new

products for sale or in the growth, breeding, raising, or other production of

new products for sale. The term does not include delicatessens, cafes,

cafeterias, restaurants, and other similar retailers that are principally engaged

in the retail sale of foods prepared by them for consumption on or off their

premises.

(11) Municipal corporation or municipality. – A city, town, incorporated village,

sanitary district, rural fire protection district, rural recreation district, mosquito

control district, hospital district, metropolitan sewerage district, watershed

improvement district, a consolidated city-county as defined by G.S. 160B-2,

or another district or unit of local government by or for which ad valorem

taxes are levied.

(12) Person. – An individual, a trustee, an executor, an administrator, another

fiduciary, a corporation, a limited liability company, an unincorporated

association, a partnership, a sole proprietorship, a company, a firm, or another

legal entity.

(13) Real property, real estate, or land. – Any of the following:

a. The land itself.

b. Buildings, structures, improvements, or permanent fixtures on land.

c. All rights and privileges belonging or in any way appertaining to the

property.

d. A manufactured home as defined in G.S. 143-143.9(6), unless it is

considered tangible personal property for failure to meet all of the


1. It is a residential structure.

2. It has the moving hitch, wheels, and axles removed.

3. It is placed upon a permanent foundation either on land owned

by the owner of the manufactured home or on land in which the

owner of the manufactured home has a leasehold interest

pursuant to a lease with a primary term of at least 20 years and

the lease expressly provides for disposition of the

manufactured home upon termination of the lease.

(13a) Retail merchant. – A taxpayer who is regularly engaged in the sale of tangible

personal property, acquired by a means other than manufacture, processing, or

producing by the merchant, to users or consumers.

(13b) Substantial understatement. – The omission of a material portion of the value,

quantity, or other measurement of taxable property. The determination of

materiality in each case shall be made by the assessor, subject to the

taxpayer's right to review of the determination by the county board of

equalization and review or board of commissioners and appeal to the Property

Tax Commission.

(14) Tangible personal property. – All personal property that is not intangible and

that is not permanently affixed to real property.


(15) Tax or taxes. – The principal amount of any property tax or dog license tax

and costs, penalties, and interest.

(16) Taxing unit. – A county or municipality authorized to levy ad valorem

property taxes.

(17) Taxpayer. – A person whose property is subject to ad valorem property

taxation by any county or municipality and any person who, under the terms

of this Subchapter, has a duty to list property for taxation.

(18) Valuation. – Appraisal and assessment.

(19) Wholesale merchant. – A taxpayer who is regularly engaged in the sale of

tangible personal property, acquired by a means other than manufacture,

processing, or producing by the merchant, to other retail or wholesale

merchants for resale or to manufacturers for use as ingredient or component

parts of articles being manufactured for sale. (1939, c. 310, s. 2; 1971, c. 806,

s. 1; 1973, c. 695, ss. 14, 15; 1985, c. 656, s. 20; 1985 (Reg. Sess., 1986), c.

947, ss. 3, 4; 1987, c. 43, s. 1; c. 440, s. 2; c. 805, s. 3; c. 813, ss. 1-4; 1991, c.

34, s. 3; 1991 (Reg. Sess., 1992), c. 975, s. 1; c. 1004, s. 1; 1993, c. 354, s. 23;

c. 459, s. 1; 1995, c. 461, s. 15; 1998-212, s. 29A.18(c); 2001-506, s. 1;

2002-156, s. 4; 2003-400, s. 4; 2006-106, ss. 1, 8; 2008-35, s. 1.1; 2009-308,

s. 1; 2009-445, s. 20; 2015-223, s. 1.)

Article 12.

Property Subject to Taxation.

§ 105-274. Property subject to taxation.

(a) All property, real and personal, within the jurisdiction of the State shall be subject to

taxation unless it is:

(1) Excluded from the tax base by a statute of statewide application enacted under

the classification power accorded the General Assembly by Article V, § 2(2),

of the North Carolina Constitution, or

(2) Exempted from taxation by the Constitution or by a statute of statewide

application enacted under the authority granted the General Assembly by

Article V, § 2(3), of the North Carolina Constitution.

(b) No provision of this Subchapter shall be construed to exempt from taxation any

property situated in this State belonging to any foreign corporation unless the context of the

provision clearly indicates a legislative intent to grant such an exemption. (1939, c. 310, ss. 303,

1800; 1961, c. 1169, s. 8; 1967, c. 1185; 1971, c. 806, s. 1.)

§ 105-275. Property classified and excluded from the tax base.

The following classes of property are designated special classes under Article V, Sec. 2(2), of

the North Carolina Constitution and are excluded from tax:


(2) Tangible personal property that has been imported from a foreign country

through a North Carolina seaport terminal and which is stored at such a

terminal while awaiting further shipment for the first 12 months of such

storage. (The purpose of this classification is to encourage the development of

the ports of this State.)


(3) Real and personal property owned by nonprofit water or nonprofit sewer

associations or corporations.


(5) Vehicles that the United States government gives to veterans on account of

disabilities they suffered in World War II, the Korean Conflict, or the Vietnam

Era so long as they are owned by:

a. A person to whom a vehicle has been given by the United States

government or

b. Another person who is entitled to receive such a gift under Title 38,

section 252, United States Code Annotated.

(5a) A motor vehicle owned by a disabled veteran that is altered with special

equipment to accommodate a service-connected disability. As used in this

section, disabled veteran means a person as defined in 38 U.S.C. § 101(2) who

is entitled to special automotive equipment for a service-connected disability,

as provided in 38 U.S.C. § 3901.

(6) Special nuclear materials held for or in the process of manufacture,

processing, or delivery by the manufacturer or processor thereof, regardless

whether the manufacturer or processor owns the special nuclear materials. The

terms "manufacture" and "processing" do not include the use of special

nuclear materials as fuel. The term "special nuclear materials" includes (i)

uranium 233, uranium enriched in the isotope 233 or in the isotope 235; and

(ii) any material artificially enriched by any of the foregoing, but not

including source material. "Source material" means any material except

special nuclear material which contains by weight one twentieth of one

percent (0.05%) or more of (i) uranium, (ii) thorium, or (iii) any combination

thereof. Provided however, that to qualify for this exemption no such nuclear

materials shall be discharged into any river, creek or stream in North Carolina.

The classification and exclusion provided for herein shall be denied to any

manufacturer, fabricator or processor who permits burial of such material in

North Carolina or who permits the discharge of such nuclear materials into the

air or into any river, creek or stream in North Carolina if such discharge

would contravene in any way the applicable health and safety standards

established and enforced by the Department of Environmental Quality or the

Nuclear Regulatory Commission. The most stringent of these standards shall

govern.

(7) Real and personal property that is:

a. Owned either by a nonprofit corporation formed under the provisions

of Chapter 55A of the General Statutes or by a bona fide charitable

organization, and either operated by such owning organization or

leased to another such nonprofit corporation or charitable organization,

and

b. Appropriated exclusively for public parks and drives.

(7a) (Expiring for taxes imposed for taxable years beginning on or after July

1, 2016) Real and personal property that meets each of the following

requirements:


a. It is a contiguous tract of land previously (i) used primarily for

commercial or industrial purposes and (ii) damaged significantly as a

result of a fire or explosion.

b. It was donated to a nonprofit corporation formed under the provisions

of Chapter 55A of the General Statutes by an entity other than an

affiliate, as defined in G.S. 105-163.010.

c. No portion is or has been leased or sold by the nonprofit corporation.

(8) a. Real and personal property that is used or, if under construction, is to

be used exclusively for air cleaning or waste disposal or to abate,

reduce, or prevent the pollution of air or water (including, but not

limited to, waste lagoons and facilities owned by public or private

utilities built and installed primarily for the purpose of providing sewer

service to areas that are predominantly residential in character or areas

that lie outside territory already having sewer service), if the

Department of Environmental Quality or a local air pollution control

program for air-cleaning devices located in an area where the

Environmental Management Commission has certified a local air

pollution control program pursuant to G.S. 143-215.112 furnishes a

certificate to the tax supervisor of the county in which the property is

situated or to be situated stating that the Environmental Management

Commission or local air pollution control program has found that the

described property:

1. Has been or will be constructed or installed;

2. Complies with or that plans therefor which have been

submitted to the Environmental Management Commission or

local air pollution control program indicate that it will comply

with the requirements of the Environmental Management

Commission or local air pollution control program;

3. Is being effectively operated or will, when completed, be

required to operate in accordance with the terms and conditions

of the permit, certificate of approval, or other document of

approval issued by the Environmental Management

Commission or local air pollution control program; and

4. Has or, when completed, will have as its primary rather than

incidental purpose the reduction of water pollution resulting

from the discharge of sewage and waste or the reduction of air

pollution resulting from the emission of air contaminants.

a1. Sub-subdivision a. of this subdivision shall not apply to an animal

waste management system, as defined in G.S. 143-215.10B, unless the

Environmental Management Commission determines that the animal

waste management system will accomplish all of the following:

1. Eliminate the discharge of animal waste to surface waters and

groundwater through direct discharge, seepage, or runoff.

2. Substantially eliminate atmospheric emissions of ammonia.


3. Substantially eliminate the emission of odor that is detectable

beyond the boundaries of the parcel or tract of land on which

the farm is located.

4. Substantially eliminate the release of disease-transmitting

vectors and airborne pathogens.

5. Substantially eliminate nutrient and heavy metal contamination

of soil and groundwater.

b. Real or personal property that is used or, if under construction, is to be

used exclusively for recycling or resource recovering of or from solid

waste, if the Department of Environmental Quality furnishes a


situated stating the Department of Environmental Quality has found

that the described property has been or will be constructed or installed,

complies or will comply with the rules of the Department of

Environmental Quality, and has, or will have as its primary purpose

recycling or resource recovering of or from solid waste.

c. Tangible personal property that is used exclusively, or if being

installed, is to be used exclusively, for the prevention or reduction of

cotton dust inside a textile plant for the protection of the health of the

employees of the plant, in accordance with occupational safety and

health standards adopted by the State of North Carolina pursuant to

Article 16 of G.S. Chapter 95. Notwithstanding the exclusive use

requirement of this sub-subdivision, all parts of a ventilation or air

conditioning system that are integrated into a system used for the

prevention or reduction of cotton dust, except for chillers and cooling

towers, are excluded from taxation under this sub-subdivision. The

Department of Revenue shall adopt guidelines to assist the tax

supervisors in administering this exclusion.

d. Real or personal property that is used or, if under construction, is to be

used by a major recycling facility as defined in G.S. 105-129.25

predominantly for recycling or resource recovering of or from solid

waste, if the Department of Environmental Quality furnishes a


situated stating the Department of Environmental Quality has found

that the described property has been or will be constructed or installed

for use by a major recycling facility, complies or will comply with the

rules of the Department of Environmental Quality, and has, or will

have as a purpose recycling or resource recovering of or from solid

waste.

(9) through (11) Repealed by Session Laws 1987, c. 813, s. 5.

(12) Real property that (i) is owned by a nonprofit corporation or association

organized to receive and administer lands for conservation purposes, (ii) is

exclusively held and used for one or more of the purposes listed in this

subdivision, and (iii) produces no income or produces income that is

incidental to and not inconsistent with the purpose or purposes for which the

land is held and used. The taxes that would otherwise be due on land


classified under this subdivision shall be a lien on the real property of the

taxpayer as provided in G.S. 105-355(a). The taxes shall be carried forward in

the records of the taxing unit or units as deferred taxes. The deferred taxes for

the preceding five fiscal years are due and payable in accordance with G.S.

105-277.1F when the property loses its eligibility for deferral as a result of a

disqualifying event. A disqualifying event occurs when the property (i) is no

longer exclusively held and used for one or more of the purposes listed in this

subdivision, (ii) produces income that is not incidental to and consistent with

the purpose or purposes for which the land is held and used, or (iii) is sold or

transferred without an easement recorded at the time of sale that requires

perpetual use of the land for one or more of the purposes listed in this

subdivision and that prohibits any use of the land that would generate income

that is not incidental to and consistent with the purpose or purposes for which

the land is held and used. In addition to the provisions in G.S. 105-277.1F, all

liens arising under this subdivision are extinguished upon the real property

being sold or transferred to a local, state, or federal government unit for

conservation purposes or subject to an easement recorded at the time of sale

that requires perpetual use of the land for one or more of the purposes listed in

this subdivision. The purposes allowed under this subdivision are any of the

following:

a. Used for an educational or scientific purpose as a nature reserve or

park in which wild nature, flora and fauna, and biotic communities are

preserved for observation and study. For purposes of this

sub-subdivision, the terms "educational purpose" and "scientific

purpose" are defined in G.S. 105-278.7(f).

b. Managed under a written wildlife habitat conservation agreement with

the North Carolina Wildlife Resources Commission.

c. Managed under a forest stewardship plan developed by the Forest

Stewardship Program.

d. Used for public access to public waters or trails.

e. Used for protection of water quality and subject to a conservation

agreement under the provision of the Conservation and Historic

Preservation Agreements Act, Article 4, Chapter 121 of the General

Statutes.

f. Held by a nonprofit land conservation organization for sale or transfer

to a local, state, or federal government unit for conservation purposes.

(13) Repealed by Session Laws 1973, c. 904.

(14) Motor vehicles chassis belonging to nonresidents, which chassis temporarily

enters the State for the purpose of having a body mounted thereon.

(15) Upon the date on which each county's next general reappraisal of real property

under the provisions of G.S. 105-286(a) becomes effective, standing timber,

pulpwood, seedlings, saplings, and other forest growth. (The purpose of this

classification is to encourage proper forest management practices and to

develop and maintain the forest resources of the State.)

(16) Non-business Property. – As used in this subdivision, the term "non-business

property" means personal property that is used by the owner of the property


for a purpose other than the production of income and is not used in

connection with a business. The term includes household furnishings,

clothing, pets, lawn tools, and lawn equipment. The term does not include

motor vehicles, mobile homes, aircraft, watercraft, or engines for watercraft.

(17) Real and personal property belonging to the American Legion, Veterans of

Foreign Wars, Disabled American Veterans, or to any similar veterans

organizations chartered by the Congress of the United States or organized and

operated on a statewide or nationwide basis, and any post or local

organization thereof, when used exclusively for meeting or lodge purposes by

said organization, together with such additional adjacent real property as may

be necessary for the convenient and normal use of the buildings thereon.

Notwithstanding the exclusive-use requirement hereinabove established, if a

part of a property that otherwise meets this subdivision's requirements is used

for a purpose that would require that it not be listed, appraised, assessed or

taxed if the entire property were so used, that part, according to its value, shall

not be listed, appraised, assessed or taxed. The fact that a building or facility

is incidentally available to and patronized by the general public, so far as there

is no material amount of business or patronage with the general public, shall

not defeat the classification granted by this section.

(18) Real and personal property belonging to the Grand Lodge of Ancient, Free

and Accepted Masons of North Carolina, the Prince Hall Masonic Grand

Lodge of North Carolina, their subordinate lodges and appendant bodies

including the Ancient and Arabic Order Nobles of the Mystic Shrine, and the

Ancient Egyptian Order Nobles of the Mystic Shrine, when used exclusively

for meeting or lodge purposes by said organization, together with such

additional adjacent real property as may be necessary for the convenient

normal use of the buildings thereon. Notwithstanding the exclusive-use

requirement hereinabove established, if a part of a property that otherwise

meets this subdivision's requirements is used for a purpose that would require

that it not be listed, appraised, assessed or taxed if the entire property were so

used, that part, according to its value, shall not be listed, appraised, assessed

or taxed. The fact that a building or facility is incidentally available to and

patronized by the general public, so far as there is no material amount of

business or patronage with the general public, shall not defeat the

classification granted by this section.

(19) Real and personal property belonging to the Loyal Order of Moose, the

Benevolent and Protective Order of Elks, the Knights of Pythias, the Odd

Fellows, the Woodmen of the World, and similar fraternal or civic orders and

organizations operated for nonprofit benevolent, patriotic, historical,

charitable, or civic purposes, when used exclusively for meeting or lodge

purposes by the organization, together with as much additional adjacent real

property as may be necessary for the convenient normal use of the buildings.

Notwithstanding the exclusive-use requirement of this subdivision, if a part of

a property that otherwise meets this subdivision's requirements is used for a

purpose that would require that it not be listed, appraised, assessed, or taxed if

the entire property were so used, that part, according to its value, shall not be


listed, appraised, assessed, or taxed. The fact that a building or facility is

incidentally available to and patronized by the general public, so far as there is

no material amount of business or patronage with the general public, shall not

defeat the classification granted by this section. Nothing in this subdivision

shall be construed so as to include social fraternities, sororities, and similar

college, university, or high school organizations in the classification for

exclusion from ad valorem taxes.


1, 2013) Improvements to real property that are (i) owned by social

fraternities, sororities, and similar college, university, or high school

organizations and (ii) located on land owned by or allocated to The University

of North Carolina or one if its constituent institutions.

(20) Real and personal property belonging to Goodwill Industries and other

charitable organizations organized for the training and rehabilitation of

disabled persons when used exclusively for training and rehabilitation,

including commercial activities directly related to such training and

rehabilitation.

(21) Repealed by Session Laws 2008-107, s. 28.11(a), effective for taxes imposed

for taxable years beginning on or after July 1, 2009.


(23) Tangible personal property imported from outside the United States and held

in a Foreign Trade Zone for the purpose of sale, manufacture, processing,

assembly, grading, cleaning, mixing or display and tangible personal property

produced in the United States and held in a Foreign Trade Zone for

exportation, either in its original form or as altered by any of the above

processes.

(24) Cargo containers and container chassis used for the transportation of cargo by

vessels in ocean commerce.

The term "container" applies to those nondisposable receptacles of a

permanent character and strong enough for repeated use and specially

designed to facilitate the carriage of goods, by one or more modes of

transport, one of which shall be by ocean vessels, without intermediate

reloadings and fitted with devices permitting its ready handling particularly in

the transfer from one transport mode to another.

(24a) Aircraft that is owned or leased by an interstate air courier, is apportioned

under G.S. 105-337 to the air courier's hub in this State, and is used in the air

courier's operations in this State. For the purpose of this subdivision, the terms

"interstate air courier" and "hub" have the meanings provided in G.S.

105-164.3.

(25) Tangible personal property shipped into this State for the purpose of repair,

alteration, maintenance or servicing and reshipment to the owner outside this

State.

(26) For the tax year immediately following transfer of title, tangible personal

property manufactured in this State for the account of a nonresident customer

and held by the manufacturer for shipment. For the purpose of this


subdivision, the term "nonresident" means a taxpayer having no place of

business in North Carolina.

(27), (28) Repealed by Session Laws 1983, c. 643, s. 1.

(29) Real property and easements wholly and exclusively held and used for

nonprofit historic preservation purposes by a nonprofit historical association

or institution, including real property owned by a nonprofit corporation

organized for historic preservation purposes and held by its owner exclusively

for sale under an historic preservation agreement to be prepared and recorded,

at the time of sale, under the provisions of the Conservation and Historic

Preservation Agreements Act, Article 4, Chapter 121 of the General Statutes

of North Carolina.

(29a) Land that is within an historic district and is held by a nonprofit corporation

organized for historic preservation purposes for use as a future site for an

historic structure that is to be moved to the site from another location.

Property may be classified under this subdivision for no more than five years.

The taxes that would otherwise be due on land classified under this

subdivision shall be a lien on the real property of the taxpayer as provided in

G.S. 105-355(a). The taxes shall be carried forward in the records of the

taxing unit or units as deferred taxes. The deferred taxes are due and payable

in accordance with G.S. 105-277.1F when the property loses its eligibility for

deferral as a result of a disqualifying event. A disqualifying event occurs

when an historic structure is not moved to the property within five years from

the first day of the fiscal year the property was classified under this

subdivision. In addition to the provisions in G.S. 105-277.1F, all liens arising

under this subdivision are extinguished upon the location of an historic

structure on the site within the time period allowed under this subdivision.


(31) Intangible personal property other than a leasehold interest that is in exempted

real property and is not excluded under subdivision (31e) of this section. This

subdivision does not affect the taxation of software not otherwise excluded by

subdivision (40) of this section.

(31a) through (31d) Repealed by Session Laws 1997-23, s. 3.

(31e) A leasehold interest in real property that is exempt under G.S. 105-278.1 and

is used to provide affordable housing for employees of the unit of government

that owns the property.

(32) Recodified as G.S. 105-278.6A by Session Laws 1998-212, s. 29A.18(a),

effective for taxes imposed for taxable years beginning on or after July 1,

1998.

(32a) Inventories owned by contractors.

(33) Inventories owned by manufacturers.

(34) Inventories owned by retail and wholesale merchants.

(35) Severable development rights, as defined in G.S. 136-66.11(a), when severed

and evidenced by a deed recorded in the office of the register of deeds

pursuant to G.S. 136-66.11(c).


(37) Poultry and livestock and feed used in the production of poultry and livestock.



(39) Real and personal property that is: (i) owned by a nonprofit corporation

organized upon the request of a State or local government unit for the sole

purpose of financing projects for public use, (ii) leased to a unit of State or

local government whose property is exempt from taxation under G.S.

105-278.1, and (iii) used in whole or in part for a public purpose by the unit of

State or local government. If only part of the property is used for a public

purpose, only that part is excluded from the tax. This subdivision does not

apply if any distributions are made to members, officers, or directors of the

nonprofit corporation.

(39a) A correctional facility, including construction in progress, that is located on

land owned by the State and is constructed pursuant to a contract with the

State, and any leasehold interest in the land owned by the State upon which

the correctional facility is located.

(40) (Effective for taxes imposed for taxable years beginning before July 1,

2014) Computer software and any documentation related to the computer

software. As used in this subdivision, the term "computer software" means

any program or routine used to cause a computer to perform a specific task or

set of tasks. The term includes system and application programs and database

storage and management programs.

The exclusion established by this subdivision does not apply to computer

software and its related documentation if the computer software meets one or

more of the following descriptions:

a. It is embedded software. "Embedded software" means computer

instructions, known as microcode, that reside permanently in the

internal memory of a computer system or other equipment and are not

intended to be removed without terminating the operation of the

computer system or equipment and removing a computer chip, a

circuit, or another mechanical device.

b. It is purchased or licensed from a person who is unrelated to the

taxpayer and it is capitalized on the books of the taxpayer in

accordance with generally accepted accounting principles, including

financial accounting standards issued by the Financial Accounting

Standards Board. A person is unrelated to a taxpayer if (i) the taxpayer

and the person are not subject to any common ownership, either

directly or indirectly, and (ii) neither the taxpayer nor the person has

any ownership interest, either directly or indirectly, in the other.

This subdivision does not affect the value or taxable status of any property

that is otherwise subject to taxation under this Subchapter.

The provisions of the exclusion established by this subdivision are not

severable. If any provision of this subdivision or its application is held invalid,

the entire subdivision is repealed.

(40) (Effective for taxes imposed for taxable years beginning on or after July

1, 2014) Computer software and any documentation related to the computer

software. As used in this subdivision, the term "computer software" means

any program or routine used to cause a computer to perform a specific task or


set of tasks. The term includes system and application programs and database

storage and management programs.

The exclusion established by this subdivision does not apply to computer

software and its related documentation if the computer software meets one or

more of the following descriptions:

a. It is embedded software. "Embedded software" means computer

instructions, known as microcode, that reside permanently in the

internal memory of a computer system or other equipment and are not

intended to be removed without terminating the operation of the

computer system or equipment and removing a computer chip, a

circuit, or another mechanical device.

b. It is purchased or licensed from a person who is unrelated to the

taxpayer and it is capitalized on the books of the taxpayer in

accordance with generally accepted accounting principles, including

financial accounting standards issued by the Financial Accounting

Standards Board. A person is unrelated to a taxpayer if (i) the taxpayer

and the person are not subject to any common ownership, either

directly or indirectly, and (ii) neither the taxpayer nor the person has

any ownership interest, either directly or indirectly, in the other. The

foregoing does not include development of software or any

modifications to software, whether done internally by the taxpayer or

externally by a third party, to meet the customer's specified needs.

This subdivision does not affect the value or taxable status of any property

that is otherwise subject to taxation under this Subchapter.

The provisions of the exclusion established by this subdivision are not

severable. If any provision of this subdivision or its application is held invalid,

the entire subdivision is repealed.

(41) Repealed by Session Laws 2012-120, s. 1(a), effective October 1, 2012.

(42) A vehicle that is offered at retail for short-term lease or rental and is owned or

leased by an entity engaged in the business of leasing or renting vehicles to

the general public for short-term lease or rental. For the purposes of this

subdivision, the term "short-term lease or rental" shall have the same meaning

as in G.S. 105-187.1, and the term "vehicle" shall have the same meaning as

in G.S. 153A-156(e) and G.S. 160A-215.1(e). A gross receipts tax as set forth

by G.S. 153A-156 and G.S. 160A-215.1 is substituted for and replaces the ad

valorem tax previously levied on these vehicles.

(42a) Heavy equipment on which a gross receipts tax may be imposed under G.S.

153A-156.1 and G.S. 160A-215.2.

(43) Real or tangible personal property that is subject to a capital lease pursuant to

G.S. 115C-531.

(44) Free samples of drugs that are required by federal law to be dispensed only on

prescription and are given to physicians and other medical practitioners to

dispense free of charge in the course of their practice.

(45) Eighty percent (80%) of the appraised value of a solar energy electric system.

For purposes of this subdivision, the term "solar energy electric system"


means all equipment used directly and exclusively for the conversion of solar

energy to electricity.


1, 2013) Real property that is occupied by a charter school and is wholly and

exclusively used for educational purposes as defined in G.S. 105-278.4(f)

regardless of the ownership of the property.


1, 2015) Energy mineral interest in property for which a permit has not been

issued under G.S. 113-395. For the purposes of this subdivision, "energy

mineral" has the same meaning as in G.S. 105-187.76.

(48) (Effective July 1, 2016) Real and personal property located on lands held in

trust by the United States for the Eastern Band of Cherokee Indians,

regardless of ownership. (1939, c. 310, s. 303; 1961, c. 1169, s. 8; 1967, c.

1185; 1971, c. 806, s. 1; c. 1121, s. 3; 1973, cc. 290, 451; c. 476, s. 128; c.

484; c. 695, s. 1; c. 790, s. 1; cc. 904, 962, 1028, 1034, 1077; c. 1262, s. 23; c.

1264, s. 1; 1975, cc. 566, 755; c. 764, s. 6; 1977, c. 771, s. 4; c. 782, s. 2; c.

1001, ss. 1, 2; 1977, 2nd Sess., c. 1200, s. 4; 1979, c. 200, s. 1; 1979, 2nd

Sess., c. 1092; 1981, c. 86, s. 1; 1981 (Reg. Sess., 1982), c. 1244, ss. 1, 2;

1983, c. 643, ss. 1, 2; c. 693; 1983 (Reg. Sess., 1984), c. 1060; 1985, c. 510, s.

1; c. 656, s. 37; 1985 (Reg. Sess., 1986), c. 982, s. 18; 1987, c. 356; c. 622, s.

2; c. 747, s. 8; c. 777, s. 6; c. 813, ss. 5, 6, 22; c. 850, s. 17; 1987 (Reg. Sess.,

1988), c. 1041, s. 1.1; 1989, c. 148, s. 4; c. 168, s. 6; c. 705; c. 723, s. 1; c.

727, ss. 28, 29; 1991, c. 717, s. 1; 1991 (Reg. Sess., 1992), c. 975, s. 2; 1993,

c. 459, s. 2; 1993 (Reg. Sess., 1994), c. 745, s. 39; 1995, c. 41, s. 2; c. 509, s.

51; 1995 (Reg. Sess., 1996), c. 646, s. 12; 1997-23, ss. 1, 3, 9; 1997-443, s.

11A.119(a); 1997-456, s. 27; 1998-55, ss. 10, 18; 1998-212, s. 29A.18(a);

1999-337, s. 35(a); 2000-2, s. 1; 2000-18, s. 1, 2000-140, ss. 71, 72(a);

2001-84, s. 3; 2001-427, s. 15(a); 2001-474, s. 8; 2002-104, s. 1; 2003-284, s.

43A.1; 2007-477, s. 1; 2007-527, s. 37; 2008-35, s. 2.1; 2008-107, s. 28.11(a);

2008-134, s. 72; 2008-144, s. 1; 2008-146, ss. 4.1, 5.1; 2008-171, ss. 7(a), (b);

2009-445, s. 21; 2010-95, s. 15; 2011-123, s. 1; 2011-274, s. 1; 2012-120, s.

1(a); 2013-259, s. 1; 2013-355, s. 3; 2013-375, s. 3(a); 2014-4, s. 18;

2015-241, s. 14.30(u); 2015-262, s. 1(a).)

§ 105-275.1: Repealed by Session Laws 2001-424, s. 34.15, as amended by Session Laws

2002-126, 30A.1, effective July 1, 2002.


2002-126, 30A.1, effective July 1, 2002.

§ 105-276. Taxation of intangible personal property.

Intangible personal property that is not excluded from taxation under G.S. 105-275 is subject

to this Subchapter. The exclusion of a class of intangible personal property from taxation under

G.S. 105-275 does not affect the appraisal or assessment of real property and tangible personal

property. (1939, c. 310, s. 601; 1971, c. 806, s. 1; 1973, c. 1180; 1985, c. 656, s. 38; 1987, c. 813,

s. 8; 1995, c. 41, s. 6; 1997-23, s. 2.)


§ 105-277. Property classified for taxation at reduced rates; certain deductions.

(a) through (c) Repealed by Session Laws 1987, c. 813, s. 9, effective for taxable years


(d) All bona fide indebtedness incurred in the purchase of fertilizer and fertilizer

materials owing by a taxpayer as principal debtor may be deducted from the total value of all

fertilizer and fertilizer materials as are held by such taxpayer for his own use in agriculture

during the current year.

(e) Repealed by Session Laws 1987, c. 813, s. 9, effective for taxable years beginning on


(f) Repealed by Session Laws 1977, c. 869, s. 1.

(g) Buildings equipped with a solar energy heating or cooling system, or both, are hereby

designated a special class of property under authority of Article V, Sec. 2(2) of the North

Carolina Constitution. Such buildings shall be assessed for taxation in accordance with each

county's schedules of value for buildings equipped with conventional heating or cooling systems

and no additional value shall be assigned for the difference in cost between a solar energy

heating or cooling system and a conventional system typically found in the county. As used in

this classification, the term "system" includes all controls, tanks, pumps, heat exchangers and

other equipment used directly and exclusively for the conversion of solar energy for heating or

cooling. The term "system" does not include any land or structural elements of the building such

as walls and roofs nor other equipment ordinarily contained in the structure.

(h) Private Water Companies. – Contributions in aid of construction and acquisition

adjustments. In assessing the property of any private water company, there shall be excluded that

portion of the investment of the company represented by contributions in aid of construction and

by acquisition adjustments which is designated a special class of property under Article V, Sec.

2(2) of the Constitution. "Investment," "contributions in aid of construction" and "acquisition

adjustment" shall have the meanings as those terms are defined in the Uniform System of

Accounts specified by the North Carolina Utilities Commission for use by such private water

company.

(i) Repealed by Session Laws 1987, c. 622, s. 5. (1947, c. 1026; 1955, c. 697, s. 1; 1961,

c. 1169, ss. 6, 7, 71/2; 1963, c. 940; 1971, c. 806, s. 1; 1973, c. 511, s. 4; c. 695, s. 2; 1975, c.

578; 1977, c. 869, s. 1; c. 965; 1979, c. 605, s. 1; 1985, c. 440; c. 656, ss. 52, 52.1; 1985 (Reg.

Sess., 1986), c. 947, s. 5; 1987, c. 622, s. 5; c. 813, s. 9; 2003-416, s. 20.)


2002-126, 30A.1, effective July 1, 2002.

§ 105-277.01. Certain farm products classified for taxation at reduced valuation.

Farm products (including crops but excluding poultry and other livestock) held by or for a

cooperative stabilization or marketing association or corporation to which they have been

delivered, conveyed, or assigned by the original producer for the purpose of sale are hereby

designated a special class of property under authority of Article V, Sec. 2(2), of the North

Carolina Constitution. Before being assessed for taxation the appraised valuation of farm

products so classified shall be reduced by the amount of any unpaid loan or advance made or

granted thereon by the United States government, an agency of the United States government, or

a cooperative stabilization or marketing association or corporation. (1973, c. 695, s. 3.)


§ 105-277.02. (For effective date, see editor's note) Certain real property held for sale

classified for taxation at reduced valuation.

(a) Residential Real Property. – Residential real property held for sale by a builder is


Carolina Constitution. For purposes of this subsection, "residential real property" is real property

that is intended to be sold and used as an individual's residence immediately or after construction

of a residence, and the term excludes property that is either occupied by a tenant or used for

commercial purposes such as residences shown to prospective buyers as models. Any increase in

value of this classified property attributable to subdivision of, improvements other than

buildings, or the construction of either a new single-family residence or a duplex on the property

by the builder is excluded from taxation under this Subchapter as long as the builder continues to

hold the property for sale. In no event shall this exclusion extend for more than three years from

the time the improved property was first subject to being listed for taxation by the builder.

(b) Commercial Property. – Commercial real property held for sale by a builder is


Carolina Constitution. For purposes of this subsection, "commercial real property" is real

property that is intended to be sold and used for commercial purposes immediately or after

improvement. Any increase in value of this classified property attributable to subdivision of or

other improvements made to the property, by the builder, is excluded from taxation under this

Subchapter as long as the builder continues to hold the property for sale. The exclusion

authorized by this subsection ends at the earlier of the following:

(1) Five years from the time the improved property was first subject to being

listed for taxation by the builder.

(2) Issuance of a building permit.

(3) Sale of the property.

(c) The builder must apply for any exclusion under this section annually as provided in

G.S. 105-282.1.

(d) In appraising property classified under this section, the assessor shall specify what

portion of the value is an increase attributable to subdivision or other improvement by the

builder. (2015-223, s. 2.)

§ 105-277.1. Elderly or disabled property tax homestead exclusion.

(a) Exclusion. – A permanent residence owned and occupied by a qualifying owner is

designated a special class of property under Article V, Sec. 2(2) of the North Carolina

Constitution and is taxable in accordance with this section. The amount of the appraised value of

the residence equal to the exclusion amount is excluded from taxation. The exclusion amount is

the greater of twenty five thousand dollars ($25,000) or fifty percent (50%) of the appraised

value of the residence. An owner who receives an exclusion under this section may not receive

other property tax relief.

A qualifying owner is an owner who meets all of the following requirements as of January 1

preceding the taxable year for which the benefit is claimed:

(1) Is at least 65 years of age or totally and permanently disabled.

(2) Has an income for the preceding calendar year of not more than the income

eligibility limit.

(3) Is a North Carolina resident.


(a1) Temporary Absence. – An otherwise qualifying owner does not lose the benefit of

this exclusion because of a temporary absence from his or her permanent residence for reasons of

health, or because of an extended absence while confined to a rest home or nursing home, so

long as the residence is unoccupied or occupied by the owner's spouse or other dependent.

(a2) Income Eligibility Limit. – For the taxable year beginning on July 1, 2008, the

income eligibility limit is twenty-five thousand dollars ($25,000). For taxable years beginning on

or after July 1, 2009, the income eligibility limit is the amount for the preceding year, adjusted

by the same percentage of this amount as the percentage of any cost-of-living adjustment made

to the benefits under Titles II and XVI of the Social Security Act for the preceding calendar year,

rounded to the nearest one hundred dollars ($100.00). On or before July 1 of each year, the

Department of Revenue must determine the income eligibility amount to be in effect for the

taxable year beginning the following July 1 and must notify the assessor of each county of the

amount to be in effect for that taxable year.


(1) Code. – The Internal Revenue Code, as defined in G.S. 105-228.90.

(1a) Income. – All moneys received from every source other than gifts or

inheritances received from a spouse, lineal ancestor, or lineal descendant. For

married applicants residing with their spouses, the income of both spouses

must be included, whether or not the property is in both names.

(1b) Owner. – A person who holds legal or equitable title, whether individually, as

a tenant by the entirety, a joint tenant, or a tenant in common, or as the holder

of a life estate or an estate for the life of another. A manufactured home

jointly owned by husband and wife is considered property held by the entirety.


(2a) Repealed by Session Laws 1985 (Reg. Sess., 1986), c. 982, s. 20.

(3) Permanent residence. – A person's legal residence. It includes the dwelling,

the dwelling site, not to exceed one acre, and related improvements. The

dwelling may be a single family residence, a unit in a multi-family residential

complex, or a manufactured home.

(3a) Property tax relief. – The property tax homestead exclusion provided in this

section, the property tax homestead circuit breaker provided in G.S.

105-277.1B, or the disabled veteran property tax homestead exclusion

provided in G.S. 105-277.1C.

(4) Totally and permanently disabled. – A person is totally and permanently

disabled if the person has a physical or mental impairment that substantially

precludes him or her from obtaining gainful employment and appears

reasonably certain to continue without substantial improvement throughout his

or her life.

(c) Application. – An application for the exclusion provided by this section should be

filed during the regular listing period, but may be filed and must be accepted at any time up to

and through June 1 preceding the tax year for which the exclusion is claimed. When property is

owned by two or more persons other than husband and wife and one or more of them qualifies

for this exclusion, each owner must apply separately for his or her proportionate share of the

exclusion.


(1) Elderly Applicants. – Persons 65 years of age or older may apply for this

exclusion by entering the appropriate information on a form made available

by the assessor under G.S. 105-282.1.

(2) Disabled Applicants. – Persons who are totally and permanently disabled may

apply for this exclusion by (i) entering the appropriate information on a form

made available by the assessor under G.S. 105-282.1 and (ii) furnishing

acceptable proof of their disability. The proof must be in the form of a

certificate from a physician licensed to practice medicine in North Carolina or

from a governmental agency authorized to determine qualification for

disability benefits. After a disabled applicant has qualified for this

classification, the applicant is not required to furnish an additional certificate

unless the applicant's disability is reduced to the extent that the applicant

could no longer be certified for the taxation at reduced valuation.

(d) Ownership by Spouses. – A permanent residence owned and occupied by husband

and wife is entitled to the full benefit of this exclusion notwithstanding that only one of them

meets the age or disability requirements of this section.

(e) Other Multiple Owners. – This subsection applies to co-owners who are not husband

and wife. Each co-owner of a permanent residence must apply separately for the exclusion

allowed under this section.

When one or more co-owners of a permanent residence qualify for the exclusion allowed

under this section and none of the co-owners qualifies for the exclusion allowed under G.S.

105-277.1C, each co-owner is entitled to the full amount of the exclusion allowed under this

section. The exclusion allowed to one co-owner may not exceed the co-owner's proportionate

share of the valuation of the property, and the amount of the exclusion allowed to all the

co-owners may not exceed the exclusion allowed under this section.


under this section and one or more of the co-owners qualify for the exclusion allowed under G.S.

105-277.1C, each co-owner who qualifies for the exclusion under this section is entitled to the

full amount of the exclusion. The exclusion allowed to one co-owner may not exceed the

co-owner's proportionate share of the valuation of the property, and the amount of the exclusion

allowed to all the co-owners may not exceed the greater of the exclusion allowed under this

section and the exclusion allowed under G.S. 105-277.1C. (1971, c. 932, s. 1; 1973, c. 448, s. 1;

1975, c. 881, s. 2; 1977, c. 666, s. 1; 1979, c. 356, s. 1; c. 846, s. 1; 1981, c. 54, s. 1; c. 1052, s. 1;

1985, c. 656, ss. 44, 45; 1985 (Reg. Sess., 1986), c. 982, ss. 19, 20; 1987, c. 45, s. 1; 1993, c.

360, s. 1; 1996, 2nd Ex. Sess., c. 18, s. 15.1(a); 2001-308, s. 1; 2007-484, s. 43.7T(a), (b);

2007-497, ss. 1.1, 2.1, 2.2; 2008-35, s. 3; 2008-107, s. 28.11(c)-(f), (i); 2009-445, s. 22(a).)

§ 105-277.1A: Repealed by Session Laws 2001-424, s. 34.15, as amended by Session Laws

2002-126, 30A.1, effective July 1, 2002.

§ 105-277.1B. Property tax homestead circuit breaker.

(a) Classification. – A permanent residence owned and occupied by a qualifying owner is

designated a special class of property under Article V, Section 2(2) of the North Carolina

Constitution and is taxable in accordance with this section.

(b) Definitions. – The definitions provided in G.S. 105-277.1 apply to this section.


(c) Income Eligibility Limit. – The income eligibility limit provided in G.S.

105-277.1(a2) applies to this section.

(d) Qualifying Owner. – For the purpose of qualifying for the property tax homestead

circuit breaker under this section, a qualifying owner is an owner who meets all of the following

requirements as of January 1 preceding the taxable year for which the benefit is claimed:

(1) The owner has an income for the preceding calendar year of not more than

one hundred fifty percent (150%) of the income eligibility limit specified in

subsection (c) of this section.

(2) The owner has owned the property as a permanent residence for at least five

consecutive years and has occupied the property as a permanent residence for

at least five years.

(3) The owner is at least 65 years of age or totally and permanently disabled.

(4) The owner is a North Carolina resident.

(e) Multiple Owners. – A permanent residence owned and occupied by husband and wife

is entitled to the full benefit of the property tax homestead circuit breaker notwithstanding that

only one of them meets the length of occupancy and ownership requirements and the age or

disability requirement of this section. When a permanent residence is owned and occupied by

two or more persons other than husband and wife, no property tax homestead circuit breaker is

allowed unless all of the owners qualify and elect to defer taxes under this section.

(f) Tax Limitation. – A qualifying owner may defer the portion of the principal amount

of tax that is imposed for the current tax year on his or her permanent residence and exceeds the

percentage of the qualifying owner's income set out in the table in this subsection. If a permanent

residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax

limit imposed by this section, then both the taxes due under this section and the taxes deferred

under this section must be apportioned among the taxing units based upon the ratio each taxing

unit's tax rate bears to the total tax rate of all units.

Income Over Income Up To Percentage -0- Income Eligibility Limit 4.0%

Income Eligibility Limit 150% of Income Eligibility Limit 5.0%

(g) Temporary Absence. – An otherwise qualifying owner does not lose the benefit of

this circuit breaker because of a temporary absence from his or her permanent residence for

reasons of health, or because of an extended absence while confined to a rest home or nursing

home, so long as the residence is unoccupied or occupied by the owner's spouse or other

dependent.

(h) Deferred Taxes. – The difference between the taxes due under this section and the

taxes that would have been payable in the absence of this section are a lien on the real property

of the taxpayer as provided in G.S. 105-355(a). The difference in taxes must be carried forward

in the records of each taxing unit as deferred taxes. The deferred taxes for the preceding three

fiscal years are due and payable in accordance with G.S. 105-277.1F when the property loses its

eligibility for deferral as a result of a disqualifying event described in subsection (i) of this

section. On or before September 1 of each year, the collector must send to the mailing address of

a residence on which taxes have been deferred a notice stating the amount of deferred taxes and

interest that would be due and payable upon the occurrence of a disqualifying event.

(i) Disqualifying Events. – Each of the following constitutes a disqualifying event:

(1) The owner transfers the residence. Transfer of the residence is not a

disqualifying event if (i) the owner transfers the residence to a co-owner of the


residence or, as part of a divorce proceeding, to his or her spouse and (ii) that

individual occupies or continues to occupy the property as his or her

permanent residence.

(2) The owner dies. Death of the owner is not a disqualifying event if (i) the

owner's share passes to a co-owner of the residence or to his or her spouse and

(ii) that individual occupies or continues to occupy the property as his or her

permanent residence.

(3) The owner ceases to use the property as a permanent residence.

(j) Gap in Deferral. – If an owner of a residence on which taxes have been deferred

under this section is not eligible for continued deferral for a tax year, the deferred taxes are

carried forward and are not due and payable until a disqualifying event occurs. If the owner of

the residence qualifies for deferral after one or more years in which he or she did not qualify for

deferral and a disqualifying event occurs, the years in which the owner did not qualify are

disregarded in determining the preceding three years for which the deferred taxes are due and

payable.

(k) Repealed by Session Laws 2008-35, s. 1.2, effective July 1, 2008.

(l) Creditor Limitations. – A mortgagee or trustee that elects to pay any tax deferred by

the owner of a residence subject to a mortgage or deed of trust does not acquire a right to

foreclose as a result of the election. Except for requirements dictated by federal law or

regulation, any provision in a mortgage, deed of trust, or other agreement that prohibits the

owner from deferring taxes on property under this section is void.

(m) Construction. – This section does not affect the attachment of a lien for personal

property taxes against a tax-deferred residence.

(n) Application. – An application for property tax relief provided by this section should

be filed during the regular listing period, but may be filed and must be accepted at any time up to

and through June 1 preceding the tax year for which the relief is claimed. Persons may apply for

this property tax relief by entering the appropriate information on a form made available by the

assessor under G.S. 105-282.1. (2007-484, s. 43.7T(b); 2007-497, s. 2.3; 2008-35, s. 1.2;

2009-445, s. 22(b).)

§ 105-277.1C. Disabled veteran property tax homestead exclusion.

(a) Classification. – A permanent residence owned and occupied by a qualifying owner is

designated a special class of property under Article V, Section 2(2) of the North Carolina

Constitution and is taxable in accordance with this section. The first forty-five thousand dollars

($45,000) of appraised value of the residence is excluded from taxation. A qualifying owner who

receives an exclusion under this section may not receive other property tax relief.


(1) Disabled veteran. – A veteran of any branch of the Armed Forces of the

United States whose character of service at separation was honorable or under

honorable conditions and who satisfies one of the following requirements:

a. As of January 1 preceding the taxable year for which the exclusion

allowed by this section is claimed, the veteran had received benefits

under 38 U.S.C. § 2101.

b. The veteran has received a certification by the United States

Department of Veterans Affairs or another federal agency indicating

that, as of January 1 preceding the taxable year for which the exclusion


allowed by this section is claimed, he or she has a service-connected,

permanent, and total disability.

c. The veteran is deceased and the United States Department of Veterans

Affairs or another federal agency has certified that, as of January 1

preceding the taxable year for which the exclusion allowed by this

section is claimed, the veteran's death was the result of a

service-connected condition.

(2) Repealed by Session Laws 2009-445, s. 22(c), effective for taxes imposed for

taxable years beginning on or after July 1, 2009.

(3) Permanent residence. – Defined in G.S. 105-277.1.

(4) Property tax relief. – Defined in G.S. 105-277.1.

(4a) Qualifying owner. – An owner, as defined in G.S. 105-277.1, who is a North

Carolina resident and one of the following:

a. A disabled veteran.

b. The surviving spouse of a disabled veteran who has not remarried.

(5), (6) Repealed by Session Laws 2009-445, s. 22(c), effective for taxes imposed for


(7) Service-connected. – Defined in 38 U.S.C. § 101.

(c) Temporary Absence. – An owner does not lose the benefit of this exclusion because

of a temporary absence from his or her permanent residence for reasons of health or because of

an extended absence while confined to a rest home or nursing home, so long as the residence is

unoccupied or occupied by the owner's spouse or other dependent.

(d) Ownership by Spouses – A permanent residence owned and occupied by husband and

wife is entitled to the full benefit of this exclusion notwithstanding that only one of them meets

the requirements of this section.

(e) Other Multiple Owners. – This subsection applies to co-owners who are not husband

and wife. Each co-owner of a permanent residence must apply separately for the exclusion

allowed under this section.


under this section and none of the co-owners qualifies for the exclusion allowed under G.S.

105-277.1, each co-owner is entitled to the full amount of the exclusion allowed under this

section. The exclusion allowed to one co-owner may not exceed the co-owner's proportionate

share of the valuation of the property, and the amount of the exclusion allowed to all the

co-owners may not exceed the exclusion allowed under this section.


under this section and one or more of the co-owners qualify for the exclusion allowed under G.S.

105-277.1, each co-owner who qualifies for the exclusion allowed under this section is entitled to

the full amount of the exclusion. The exclusion allowed to one co-owner may not exceed the

co-owner's proportionate share of the valuation of the property, and the amount of the exclusion

allowed to all the co-owners may not exceed the greater of the exclusion allowed under this

section and the exclusion allowed under G.S. 105-277.1.

(f) Application. – An application for the exclusion allowed under this section should be

filed during the regular listing period, but may be filed and must be accepted at any time up to

and through June 1 preceding the tax year for which the exclusion is claimed. An applicant for an

exclusion under this section must establish eligibility for the exclusion by providing a copy of


the veteran's disability certification or evidence of benefits received under 38 U.S.C. § 2101.

(2008-107, s. 28.11(b); 2009-445, s. 22(c); 2010-95, s. 16; 2010-96, s. 41.)

§ 105-277.1D. (Effective for taxes imposed for taxable years beginning on or after July 1,

2010. See note for repeal.) Inventory property tax deferral.

(a) Classification. – A residence constructed by a builder and owned by the builder or a

business entity of which the builder is a member, as defined in G.S. 105-277.2, is designated a

special class of property under Section 2(2) of Article V of the North Carolina Constitution and

is taxable in accordance with this section. For purposes of this section, a "residence" is an

improvement, other than remodeling, renovating, rehabilitating, or refinishing, by a builder to

real property that is intended to be sold and used as an individual's residence, that is unoccupied,

and for which a certificate of occupancy authorized by law has been issued.

(b) Deferred Taxes. – An owner may defer the portion of tax imposed on real property

that represents the increase in value of the property attributable solely to improvements resulting

from the construction by the builder of a residence on the property. The difference between the

taxes due under this section and the taxes that would have been payable in the absence of this

section are a lien on the real property of the taxpayer as provided in G.S. 105-355(a). The

difference in taxes for the fiscal years preceding the current tax year shall be carried forward in

the records of the taxing unit or units as deferred taxes. The deferred taxes are due and payable in

accordance with G.S. 105-277.1F when the property loses its eligibility for deferral because of

the occurrence of a disqualifying event. A disqualifying event occurs at the earliest of (i) when

the owner transfers the residence, (ii) when the residence is occupied by the owner or by

someone other than the owner with the owner's consent, (iii) five years from the time the

improved property was first subject to being listed for taxation by the owner, or (iv) three years

from the time the improved property first received the property tax benefit provided by this

section. On or before September 1 of each year, the collector shall notify each owner to whom a

tax deferral has previously been granted of the accumulated sum of deferred taxes and interest.

(c) Creditor Limitations. – A mortgagee or trustee that elects to pay any tax deferred by

the owner subject to a mortgage or deed of trust does not acquire a right to foreclose as a result

of the election. Except for requirements dictated by federal law or regulation, any provision in a

mortgage, deed of trust, or other agreement that prohibits the owner from deferring taxes on

property under this section is void.

(d) Construction. – This section does not affect the attachment of a lien for personal

property taxes against a tax-deferred residence.

(e) Application. – An application for property tax relief provided by this section should

be filed during the regular listing period but may be filed after the regular listing period upon a

showing of good cause by the applicant for failure to make a timely application, as determined

and approved by the board of equalization and review or, if that board is not in session, by the

board of county commissioners. An untimely application approved under this subsection applies

only to property taxes levied by the county or municipality in the calendar year in which the

untimely application is filed. Decisions of the county board may be appealed to the Property Tax

Commission. Persons may apply for this property tax relief by entering the appropriate

information on a form made available by the assessor under G.S. 105-282.1. (2009-308, s. 2;

2010-140, s. 1.)

§ 105-277.1E. Reserved for future codification purposes.


§ 105-277.1F. Uniform provisions for payment of deferred taxes.

(a) Scope. – This section applies to the following deferred tax programs:

(1) G.S. 105-275(12), real property owned by a nonprofit corporation held as a

protected natural area.

(1a) G.S. 105-275(29a), historic district property held as future site of historic

structure.

(2) G.S. 105-277.1B, the property tax homestead circuit breaker.

(2a) (See note for repeal) G.S. 105-277.1D, the inventory property tax deferral.

(3) G.S. 105-277.4(c), present-use value property.

(4) G.S. 105-277.14, working waterfront property.

(4a) G.S. 105-277.15, wildlife conservation land.

(4b) (Effective for taxes imposed for taxable years beginning on or after July

1, 2013) G.S. 105-277.15A, site infrastructure land.

(5) G.S. 105-278(b), historic property.

(6) G.S. 105-278.6(e), nonprofit property held as future site of low- or

moderate-income housing.

(b) Payment. – Taxes deferred on property under a deferral program listed in subsection

(a) of this section are due and payable on the day the property loses its eligibility for the deferral

program as a result of a disqualifying event. If only a part of property for which taxes are

deferred loses its eligibility for deferral, the assessor must determine the amount of deferred

taxes that apply to that part and that amount is due and payable. Interest accrues on deferred

taxes as if they had been payable on the dates on which they would have originally become due.

The tax for the fiscal year that begins in the calendar year in which the deferred taxes are due

and payable is computed as if the property had not been classified for that year. A lien for

deferred taxes is extinguished when the taxes are paid.

All or part of the deferred taxes that are not due and payable may be paid to the tax collector

at any time without affecting the property's eligibility for deferral. A partial payment is applied

first to accrued interest. (2008-35, s. 2.2; 2008-107, s. 28.11(h); 2008-171, s. 2; 2009-308, s. 3;

2011-274, s. 2; 2012-79, s. 1.9; 2013-130, s. 3.)

§ 105-277.2. Agricultural, horticultural, and forestland – Definitions.

The following definitions apply in G.S. 105-277.3 through G.S. 105-277.7:

(1) Agricultural land. – Land that is a part of a farm unit that is actively engaged

in the commercial production or growing of crops, plants, or animals under a

sound management program. For purposes of this definition, the commercial

production or growing of animals includes the rearing, feeding, training,

caring, and managing of horses. Agricultural land includes woodland and

wasteland that is a part of the farm unit, but the woodland and wasteland

included in the unit must be appraised under the use-value schedules as

woodland or wasteland. A farm unit may consist of more than one tract of

agricultural land, but at least one of the tracts must meet the requirements in

G.S. 105-277.3(a)(1), and each tract must be under a sound management

program. If the agricultural land includes less than 20 acres of woodland, then

the woodland portion is not required to be under a sound management

program. Also, woodland is not required to be under a sound management


program if it is determined that the highest and best use of the woodland is to

diminish wind erosion of adjacent agricultural land, protect water quality of

adjacent agricultural land, or serve as buffers for adjacent livestock or poultry

operations.

(1a) Business entity. – A corporation, a general partnership, a limited partnership,

or a limited liability company.

(2) Forestland. – Land that is a part of a forest unit that is actively engaged in the

commercial growing of trees under a sound management program. Forestland

includes wasteland that is a part of the forest unit, but the wasteland included

in the unit must be appraised under the use-value schedules as wasteland. A

forest unit may consist of more than one tract of forestland, but at least one of

the tracts must meet the requirements in G.S. 105-277.3(a)(3), and each tract

must be under a sound management program.

(3) Horticultural land. – Land that is a part of a horticultural unit that is actively

engaged in the commercial production or growing of fruits or vegetables or

nursery or floral products under a sound management program. Horticultural

land includes woodland and wasteland that is a part of the horticultural unit,

but the woodland and wasteland included in the unit must be appraised under

the use-value schedules as woodland or wasteland. A horticultural unit may

consist of more than one tract of horticultural land, but at least one of the

tracts must meet the requirements in G.S. 105-277.3(a)(2), and each tract must

be under a sound management program. If the horticultural land includes less

than 20 acres of woodland, then the woodland portion is not required to be

under a sound management program. Also, woodland is not required to be

under a sound management program if it is determined that the highest and

best use of the woodland is to diminish wind erosion of adjacent horticultural

land or protect water quality of adjacent horticultural land. Land used to grow

horticultural and agricultural crops on a rotating basis or where the

horticultural crop is set out or planted and harvested within one growing

season, may be treated as agricultural land as described in subdivision (1) of

this section when there is determined to be no significant difference in the

cash rental rates for the land.

(4) Individually owned. – Owned by one of the following:

a. An individual.

b. A business entity that meets all of the following conditions:

1. Its principal business is farming agricultural land, horticultural

land, or forestland. When determining whether an applicant

under G.S. 105-277.4 has as its principal business farming

agricultural land, horticultural land, or forestland, the assessor

shall presume the applicant's principal business to be farming

agricultural land, horticultural land, or forestland if the

applicant has been approved by another county for present-use

value taxation for a qualifying property located within the other

county; provided, however, the presumption afforded the

applicant may be rebutted by the assessor and shall have no

bearing on the determination of whether the individual parcel


of land meets one or more of the classes defined in G.S.

105-277.3(a). If the assessor is able to rebut the presumption,

this shall not invalidate the determination that the applicant's

principal business is farming agricultural land, horticultural

land, or forestland in the other county.

2. All of its members are, directly or indirectly, individuals who

are actively engaged in farming agricultural land, horticultural

land, or forestland or a relative of one of the individuals who is

actively engaged. An individual is indirectly a member of a

business entity that owns the land if the individual is a member

of a business entity or a beneficiary of a trust that is part of the

ownership structure of the business entity that owns the land.

3. It is not a corporation whose shares are publicly traded, and

none of its members are corporations whose shares are publicly

traded.

4. If it leases the land, all of its members are individuals and are

relatives. Under this condition, "principal business" and

"actively engaged" include leasing.

c. A trust that meets all of the following conditions:

1. It was created by an individual who owned the land and

transferred the land to the trust.

2. All of its beneficiaries are, directly or indirectly, individuals

who are the creator of the trust or a relative of the creator. An

individual is indirectly a beneficiary of a trust that owns the

land if the individual is a beneficiary of another trust or a

member of a business entity that has a beneficial interest in the

trust that owns the land.

d. A testamentary trust that meets all of the following conditions:

1. It was created by an individual who transferred to the trust land

that qualified in that individual's hands for classification under

G.S. 105-277.3.

2. At the date of the creator's death, the creator had no relatives.

3. The trust income, less reasonable administrative expenses, is

used exclusively for educational, scientific, literary, cultural,

charitable, or religious purposes as defined in G.S.

105-278.3(d).

e. Tenants in common, if each tenant would qualify as an owner if the

tenant were the sole owner. Tenants in common may elect to treat their

individual shares as owned by them individually in accordance with

G.S. 105-302(c)(9). The ownership requirements of G.S. 105-277.3(b)

apply to each tenant in common who is an individual, and the

ownership requirements of G.S. 105-277.3(b1) apply to each tenant in

common who is a business entity or a trust.

(4a) Member. – A shareholder of a corporation, a partner of a general or limited

partnership, or a member of a limited liability company.


(5) Present-use value. – The value of land in its current use as agricultural land,

horticultural land, or forestland, based solely on its ability to produce income

and assuming an average level of management. A rate of nine percent (9%)

shall be used to capitalize the expected net income of forestland. The

capitalization rate for agricultural land and horticultural land is to be

determined by the Use-Value Advisory Board as provided in G.S. 105-277.7.

(5a) Relative. – Any of the following:

a. A spouse or the spouse's lineal ancestor or descendant.

b. A lineal ancestor or a lineal descendant.

c. A brother or sister, or the lineal descendant of a brother or sister. For

the purposes of this sub-subdivision, the term brother or sister includes

stepbrother or stepsister.

d. An aunt or an uncle.

e. A spouse of an individual listed in paragraphs a. through d. For the

purpose of this subdivision, an adoptive or adopted relative is a

relative and the term "spouse" includes a surviving spouse.

(6) Sound management program. – A program of production designed to obtain

the greatest net return from the land consistent with its conservation and

long-term improvement.

(7) Unit. – One or more tracts of agricultural land, horticultural land, or

forestland. Multiple tracts must be under the same ownership and be of the

same type of classification. If the multiple tracts are located within different

counties, they must be within 50 miles of a tract qualifying under G.S.

105-277.3(a). (1973, c. 709, s. 1; 1975, c. 746, s. 1; 1985, c. 628, s. 1; c. 667,

ss. 1, 4; 1987, c. 698, s. 1; 1995, c. 454, s. 1; 1995 (Reg. Sess., 1996), c. 646,

s. 17; 1998-98, s. 24; 2002-184, s. 1; 2004-8, s. 1; 2005-313, ss. 1, 2;

2008-146, s. 2.1; 2015-263, s. 12(a).)

§ 105-277.3. Agricultural, horticultural, and forestland – Classifications.

(a) Classes Defined. – The following classes of property are designated special classes of

property under authority of Section 2(2) of Article V of the North Carolina Constitution and

must be appraised, assessed, and taxed as provided in G.S. 105-277.2 through G.S. 105-277.7.

(1) Agricultural land. – Individually owned agricultural land consisting of one or

more tracts, one of which satisfies the requirements of this subdivision. For

agricultural land used as a farm for aquatic species, as defined in G.S.

106-758, the tract must meet the income requirement for agricultural land and

must consist of at least five acres in actual production or produce at least

20,000 pounds of aquatic species for commercial sale annually, regardless of

acreage. For all other agricultural land, the tract must meet the income

requirement for agricultural land and must consist of at least 10 acres that are

in actual production. Land in actual production includes land under

improvements used in the commercial production or growing of crops, plants,

or animals.

To meet the income requirement, agricultural land must, for the three

years preceding January 1 of the year for which the benefit of this section is

claimed, have produced an average gross income of at least one thousand


dollars ($1,000). Gross income includes income from the sale of the

agricultural products produced from the land, any payments received under a

governmental soil conservation or land retirement program, and the amount

paid to the taxpayer during the taxable year pursuant to P.L. 108-357, Title

VI, Fair and Equitable Tobacco Reform Act of 2004.

(2) Horticultural land. – Individually owned horticultural land consisting of one

or more tracts, one of which consists of at least five acres that are in actual

production and that, for the three years preceding January 1 of the year for

which the benefit of this section is claimed, have met the applicable minimum

gross income requirement. Land in actual production includes land under

improvements used in the commercial production or growing of fruits or

vegetables or nursery or floral products. Land that has been used to produce

evergreens intended for use as Christmas trees must have met the minimum

gross income requirements established by the Department of Revenue for the

land. All other horticultural land must have produced an average gross income

of at least one thousand dollars ($1,000). Gross income includes income from

the sale of the horticultural products produced from the land and any

payments received under a governmental soil conservation or land retirement

program.

(3) Forestland. – Individually owned forestland consisting of one or more tracts,

one of which consists of at least 20 acres that are in actual production and are

not included in a farm unit.

(b) Individual Ownership Requirements. – In order to come within a classification

described in subsection (a) of this section, land owned by an individual must also satisfy one of


(1) It is the owner's place of residence.

(2) It has been owned by the current owner or a relative of the current owner for

the four years preceding January 1 of the year for which the benefit of this

section is claimed.

(3) At the time of transfer to the current owner, it qualified for classification in

the hands of a business entity or trust that transferred the land to the current

owner who was a member of the business entity or a beneficiary of the trust,

as appropriate.

(b1) Entity Ownership Requirements. – In order to come within a classification described

in subsection (a) of this section, land owned by a business entity must meet the requirements of

subdivision (1) of this subsection and land owned by a trust must meet the requirements of


(1) Land owned by a business entity must have been owned by one or more of the

following for the four years immediately preceding January 1 of the year for

which the benefit of this section is claimed:

a. The business entity.

b. A member of the business entity.

c. Another business entity whose members include a member of the

business entity that currently owns the land.


(2) Land owned by a trust must have been owned by the trust or by one or more

of its creators for the four years immediately preceding January 1 of the year

for which the benefit of this section is claimed.

(b2) Exceptions to Ownership Requirements. – Notwithstanding the provisions of

subsections (b) and (b1) of this section, land may qualify for classification in the hands of the

new owner if all of the conditions listed in either subdivision of this subsection are met, even if

the new owner does not meet all of the ownership requirements of subsections (b) and (b1) of

this section with respect to the land.

(1) Continued use. – If the land qualifies for classification in the hands of the new

owner under the provisions of this subdivision, then any deferred taxes remain

a lien on the land under G.S. 105-277.4(c), the new owner becomes liable for

the deferred taxes, and the deferred taxes become payable if the land fails to

meet any other condition or requirement for classification. Land qualifies for

classification in the hands of the new owner if all of the following conditions

are met:

a. The land was appraised at its present use value at the time title to the

land passed to the new owner.

b. The new owner acquires the land and continues to use the land for the

purpose for which it was classified under subsection (a) of this section

while under previous ownership.

c. The new owner has timely filed an application as required by G.S.

105-277.4(a) and has certified that the new owner accepts liability for

any deferred taxes and intends to continue the present use of the land.

(2) Expansion of existing unit. – Land qualifies for classification in the hands of

the new owner if, at the time title passed to the new owner, the land was not

appraised at its present-use value but was being used for the same purpose and

was eligible for appraisal at its present-use value as other land already owned

by the new owner and classified under subsection (a) of this section. The new

owner must timely file an application as required by G.S. 105-277.4(a).

(c) Repealed by Session Laws 1995, c. 454, s. 2.

(d) Exception for Conservation Reserve Program. – Land enrolled in the federal

Conservation Reserve Program authorized by 16 U.S.C. Chapter 58 is considered to be in actual

production, and income derived from participation in the federal Conservation Reserve Program

may be used in meeting the minimum gross income requirements of this section either separately

or in combination with income from actual production. Land enrolled in the federal Conservation

Reserve Program must be assessed as agricultural land if it is planted in vegetation other than

trees, or as forestland if it is planted in trees.

(d1) Conservation Exception. – Property that is appraised at its present-use value under

G.S. 105-277.4(b) shall continue to qualify for appraisal, assessment, and taxation as provided in

G.S. 105-277.2 through G.S. 105-277.7 as long as (i) the property is subject to a qualifying

conservation easement that meets the requirements of G.S. 113A-232, without regard to actual

production or income requirements of this section; and (ii) the taxpayer received no more than

seventy-five percent (75%) of the fair market value of the donated property interest in

compensation. Notwithstanding G.S. 105-277.3(b) and (b1), subsequent transfer of the property

does not extinguish its present-use value eligibility as long as the property remains subject to a


qualifying conservation easement. The exception provided in this subsection applies only to that

part of the property that is subject to the easement.

(d2) Wildlife Exception. – When an owner of land classified under this section does not

transfer the land and the land becomes eligible for classification under G.S. 105-277.15, no

deferred taxes are due. The deferred taxes remain a lien on the land and are payable in

accordance with G.S. 105-277.15.

(d3) (Effective for taxes imposed for taxable years beginning on or after July 1, 2013)

Site Infrastructure Exception. – When an owner of land classified under this section (i) does not

transfer the land and the land becomes eligible for classification under G.S. 105-277.15A or (ii)

does transfer the land but the land becomes eligible for classification under G.S. 105-277.15A

within six months of the transfer, no deferred taxes are due. The deferred taxes remain a lien on

the land and are payable in accordance with G.S. 105-277.15A.

(e) Exception for Turkey Disease. – Agricultural land that meets all of the following

conditions is considered to be in actual production and to meet the minimum gross income

requirements:

(1) The land was in actual production in turkey growing within the preceding two

years and qualified for present use value treatment while it was in actual

production.

(2) The land was taken out of actual production in turkey growing solely for

health and safety considerations due to the presence of Poult Enteritis

Mortality Syndrome among turkeys in the same county or a neighboring

county.

(3) The land is otherwise eligible for present use value treatment.

(f) Sound Management Program for Agricultural Land and Horticultural Land. – If the

property owner demonstrates any one of the following factors with respect to agricultural land or

horticultural land, then the land is operated under a sound management program:

(1) Enrollment in and compliance with an agency-administered and approved

farm management plan.

(2) Compliance with a set of best management practices.

(3) Compliance with a minimum gross income per acre test.

(4) Evidence of net income from the farm operation.

(5) Evidence that farming is the farm operator's principal source of income.

(6) Certification by a recognized agricultural or horticultural agency within the

county that the land is operated under a sound management program.

Operation under a sound management program may also be demonstrated by evidence of other

similar factors. As long as a farm operator meets the sound management requirements, it is

irrelevant whether the property owner received income or rent from the farm operator.

(g) Sound Management Program for Forestland. – If the owner of forestland

demonstrates that the forestland complies with a written sound forest management plan for the

production and sale of forest products, then the forestland is operated under a sound management

program. (1973, c. 709, s. 1; 1975, c. 746, s. 2; 1983, c. 821; c. 826; 1985, c. 667, ss. 2, 3, 6.1;

1987, c. 698, ss. 2-5; 1987 (Reg. Sess., 1988), c. 1044, s. 13.1; 1989, cc. 99, 736, s. 1; 1989 (Reg.

Sess., 1990), c. 814, s. 29; 1995, c. 454, s. 2; 1997-272, s. 1; 1998-98, s. 22; 2001-499, s. 1;

2002-184, s. 2; 2005-293, s. 1; 2005-313, s. 3; 2007-484, s. 43.7T(c); 2007-497, s. 3.1;

2008-146, s. 2.2; 2008-171, ss. 4, 5; 2011-9, s. 1; 2013-130, s. 2; 2014-3, s. 14.14(a).)


§ 105-277.4. Agricultural, horticultural and forestland – Application; appraisal at use

value; appeal; deferred taxes.

(a) Application. – Property coming within one of the classes defined in G.S. 105-277.3 is

eligible for taxation on the basis of the value of the property in its present use if a timely and

proper application is filed with the assessor of the county in which the property is located. The

application must clearly show that the property comes within one of the classes and must also

contain any other relevant information required by the assessor to properly appraise the property

at its present-use value. An initial application must be filed during the regular listing period of

the year for which the benefit of this classification is first claimed, or within 30 days of the date

shown on a notice of a change in valuation made pursuant to G.S. 105-286 or G.S. 105-287. A

new application is not required to be submitted unless the property is transferred or becomes

ineligible for use-value appraisal because of a change in use or acreage. An application required

due to transfer of the land may be submitted at any time during the calendar year but must be

submitted within 60 days of the date of the property's transfer.

(a1) Late Application. – Upon a showing of good cause by the applicant for failure to

make a timely application as required by subsection (a) of this section, an application may be

approved by the board of equalization and review or, if that board is not in session, by the board

of county commissioners. An untimely application approved under this subsection applies only

to property taxes levied by the county or municipality in the calendar year in which the untimely

application is filed. Decisions of the county board may be appealed to the Property Tax

Commission.

(b) Appraisal at Present-use Value. – Upon receipt of a properly executed application, the

assessor must appraise the property at its present-use value as established in the schedule

prepared pursuant to G.S. 105-317. In appraising the property at its present-use value, the

assessor must appraise the improvements located on qualifying land according to the schedules

and standards used in appraising other similar improvements in the county. If all or any part of a

qualifying tract of land is located within the limits of an incorporated city or town, or is property

annexed subject to G.S. 160A-37(f1) or G.S. 160A-49(f1), the assessor must furnish a copy of

the property record showing both the present-use appraisal and the valuation upon which the

property would have been taxed in the absence of this classification to the collector of the city or

town. The assessor must also notify the tax collector of any changes in the appraisals or in the

eligibility of the property for the benefit of this classification. Upon a request for a certification

pursuant to G.S. 160A-37(f1) or G.S.160A-49(f1), or any change in the certification, the assessor

for the county where the land subject to the annexation is located must, within 30 days,

determine if the land meets the requirements of G.S. 160A-37(f1)(2) or G.S. 160A-49(f1)(2) and

report the results of its findings to the city.

(b1) Appeal. – Decisions of the assessor regarding the qualification or appraisal of

property under this section may be appealed to the county board of equalization and review or, if

that board is not in session, to the board of county commissioners. An appeal must be made

within 60 days after the decision of the assessor. If an owner submits additional information to

the assessor pursuant to G.S. 105-296(j), the appeal must be made within 60 days after the

assessor's decision based on the additional information. Decisions of the county board may be

appealed to the Property Tax Commission.

(c) Deferred Taxes. – Land meeting the conditions for classification under G.S.

105-277.3 must be taxed on the basis of the value of the land for its present use. The difference

between the taxes due on the present-use basis and the taxes that would have been payable in the


absence of this classification, together with any interest, penalties, or costs that may accrue

thereon, are a lien on the real property of the taxpayer as provided in G.S. 105-355(a). The

difference in taxes must be carried forward in the records of the taxing unit or units as deferred

taxes. The deferred taxes for the preceding three fiscal years are due and payable in accordance

with G.S. 105-277.1F when the property loses its eligibility for deferral as a result of a

disqualifying event. A disqualifying event occurs when the land fails to meet any condition or

requirement for classification or when an application is not approved.

(d) Exceptions. – Notwithstanding the provisions of subsection (c) of this section, if

property loses its eligibility for present use value classification solely due to one of the following

reasons, no deferred taxes are due and the lien for the deferred taxes is extinguished:

(1) There is a change in income caused by enrollment of the property in the

federal conservation reserve program established under 16 U.S.C. Chapter 58.

(2) The property is conveyed by gift to a nonprofit organization and qualifies for

exclusion from the tax base pursuant to G.S. 105-275(12) or G.S.

105-275(29).

(3) The property is conveyed by gift to the State, a political subdivision of the

State, or the United States.

(e) Repealed by Session Laws 1997-270, s. 3, effective July 3, 1997.

(f) The Department shall publish a present-use value program guide annually and make

the guide available electronically on its Web site. When making decisions regarding the

qualifications or appraisal of property under this section, the assessor shall adhere to the

Department's present-use value program guide. (1973, c. 709, s. 1; c. 905; c. 906, ss. 1, 2; 1975,

c. 62; c. 746, ss. 3-7; 1981, c. 835; 1985, c. 518, s. 1; c. 667, ss. 5, 6; 1987, c. 45, s. 1; c. 295, s.

5; c. 698, s. 6; 1987 (Reg. Sess., 1988), c. 1044, s. 13.2; 1995, c. 443, s. 4; c. 454, s. 3; 1997-270,

s. 3; 1998-98, s. 23; 1998-150, s. 1; 2001-499, s. 2; 2002-184, s. 3; 2005-313, s. 4; 2006-30, s. 4;

2008-35, s. 2.3; 2015-263, s. 12(b).)

§ 105-277.5. Agricultural, horticultural and forestland – Notice of change in use.

Not later than the close of the listing period following a change which would disqualify all or

a part of a tract of land receiving the benefit of this classification, the property owner shall

furnish the assessor with complete information regarding such change. Any property owner who

fails to notify the assessor of changes as aforesaid regarding land receiving the benefit of this

classification shall be subject to a penalty of ten percent (10%) of the total amount of the

deferred taxes and interest thereon for each listing period for which the failure to report

continues. (1973, c. 709, s. 1; 1975, c. 746, s. 8; 1987, c. 45, s. 1.)

§ 105-277.6. Agricultural, horticultural and forestland – Appraisal; computation of

deferred tax.

(a) In determining the amount of the deferred taxes herein provided, the assessor shall

use the appraised valuation established in the county's last general revaluation except for any

changes made under the provisions of G.S. 105-287.

(b) In revaluation years, as provided in G.S. 105-286, all property entitled to

classification under G.S. 105-277.3 shall be reappraised at its true value in money and at its

present use value as of the effective date of the revaluation. The two valuations shall continue in

effect and shall provide the basis for deferred taxes until a change in one or both of the appraisals

is required by law. The present use-value schedule, standards, and rules shall be used by the tax


assessor to appraise property receiving the benefit of this classification until the next general

revaluation of real property in the county as required by G.S. 105-286.

(c) Repealed by Session Laws 1987, c. 295, s. 2. (1973, c. 709, s. 1; 1975, c. 746, ss. 9,

10; 1987, c. 45, s. 1, c. 295, s. 2.)

§ 105-277.7. Use-Value Advisory Board.

(a) Creation and Membership. – The Use-Value Advisory Board is established under the

supervision of the Agricultural Extension Service of North Carolina State University. The

Director of the Agricultural Extension Service of North Carolina State University shall serve as

the chair of the Board. The Board shall consist of the following additional members, to serve ex

officio:

(1) A representative of the Department of Agriculture and Consumer Services,

designated by the Commissioner of Agriculture.

(2) A representative of the North Carolina Forest Service of the Department of

Agriculture and Consumer Services, designated by the Director of that

Division.

(3) A representative of the Agricultural Extension Service at North Carolina

Agricultural and Technical State University, designated by the Director of the

Extension Service.

(4) A representative of the North Carolina Farm Bureau Federation, Inc.,

designated by the President of the Bureau.

(5) A representative of the North Carolina Association of Assessing Officers,

designated by the President of the Association.

(6) The Director of the Property Tax Division of the North Carolina Department

of Revenue or the Director's designee.

(7) A representative of the North Carolina Association of County Commissioners,

designated by the President of the Association.

(8) A representative of the North Carolina Forestry Association, designated by the

President of the Association.

(b) Staff. – The Agricultural Extension Service at North Carolina State University must

provide clerical assistance to the Board.

(c) Duties. – The Board must annually submit to the Department of Revenue a

recommended use-value manual. In developing the manual, the Board may consult with federal

and State agencies as needed. The manual must contain all of the following:

(1) The estimated cash rental rates for agricultural lands and horticultural lands

for the various classes of soils found in the State. The rental rates must

recognize the productivity levels by class of soil or geographic area, and the

crop as either agricultural or horticultural. The rental rates must be based on

the rental value of the land to be used for agricultural or horticultural purposes

when those uses are presumed to be the highest and best use of the land. The

recommended rental rates may be established from individual county studies

or from contracts with federal or State agencies as needed.

(2) The recommended net income ranges for forestland furnished to the Board by

the Forestry Section of the North Carolina Cooperative Extension Service.

These net income ranges may be based on up to six classes of land within

each Major Land Resource Area designated by the United States Soil


Conservation Service. In developing these ranges, the Forestry Section must

consider the soil productivity and indicator tree species or stand type, the

average stand establishment and annual management costs, the average

rotation length and timber yield, and the average timber stumpage prices.

(3) The capitalization rates adopted by the Board prior to February 1 for use in

capitalizing incomes into values. The capitalization rate for forestland shall be

nine percent (9%). The capitalization rate for agricultural land and

horticultural land must be no less than six percent (6%) and no more than

seven percent (7%). The incomes must be in the form of cash rents for

agricultural lands and horticultural lands and net incomes for forestlands.

(4) The value per acre adopted by the Board for the best agricultural land. The

value may not exceed one thousand two hundred dollars ($1,200).

(5) Recommendations concerning any changes to the capitalization rate for

agricultural land and horticultural land and to the maximum value per acre for

the best agricultural land and horticultural land based on a calculation to be

determined by the Board. The Board shall annually report these

recommendations to the Revenue Laws Study Committee and to the President

Pro Tempore of the Senate and the Speaker of the House of Representatives.

(6) Recommendations concerning requirements for horticultural land used to

produce evergreens intended for use as Christmas trees when requested to do

so by the Department. (1973, c. 709, s. 1; 1975, c. 746, s. 11; 1985, c. 628, s.

2; 1989, c. 727, s. 218(44); c. 736, s. 2; 1997-261, s. 109; 1997-443, s.

11A.119(a); 2002-184, s. 4; 2005-313, s. 5; 2005-386, s. 1.3; 2011-145, s.

13.25(oo); 2013-155, s. 7.)

§ 105-277.8. (Effective for taxes imposed for taxable years beginning before July 1, 2012)

Taxation of property of nonprofit homeowners' association.

(a) The value of real and personal property owned by a nonprofit homeowners'

association shall be included in the appraisals of property owned by members of the association

and shall not be assessed against the association if:

(1) All property owned by the association is held for the use, benefit, and

enjoyment of all members of the association equally;

(2) Each member of the association has an irrevocable right to use and enjoy, on

an equal basis, all property owned by the association, subject to any

restrictions imposed by the instruments conveying the right or the rules,

regulations, or bylaws of the association; and

(3) Each irrevocable right to use and enjoy all property owned by the association

is appurtenant to taxable real property owned by a member of the association.

The assessor may allocate the value of the association's property among the property of the

association's members on any fair and reasonable basis.

(b) As used in this section, "nonprofit homeowners' association" means a homeowners'

association as defined in § 528(c) of the Internal Revenue Code. (1979, c. 686, s. 1; 1987, c.

130.)

§ 105-277.8. (Effective for taxes imposed for taxable years beginning on or after July 1,

2012) Taxation of property of nonprofit homeowners' association.


(a) Except as provided in subsection (a1) of this section, the value of real and personal

property owned by a nonprofit homeowners' association shall be included in the appraisals of

property owned by members of the association and shall not be assessed against the association

if each of the following requirements is met:

(1) All property owned by the association is held for the use, benefit, and

enjoyment of all members of the association equally.

(2) Each member of the association has an irrevocable right to use and enjoy, on

an equal basis, all property owned by the association, subject to any

restrictions imposed by the instruments conveying the right or the rules,

regulations, or bylaws of the association.

(3) Each irrevocable right to use and enjoy all property owned by the association

is appurtenant to taxable real property owned by a member of the association.

The assessor may allocate the value of the association's property among the property of the

association's members on any fair and reasonable basis.

(a1) The value of extraterritorial common property shall be subject to taxation only in the

jurisdiction in which it is entirely contained and only in the amount of the local tax of the

jurisdiction in which it is entirely contained. The value of any property taxed pursuant to this

subsection, as determined by the latest schedule of values, shall not be included in the appraisals

of property owned by members of the association that are referenced in subsection (a) of this

section or otherwise subject to taxation. The assessor for the jurisdiction that imposes a tax

pursuant to this subsection shall provide notice of the property, the value, and any other

information to the assessor of any other jurisdiction so that the real properties owned by the

members of the association are not subject to taxation for that value. The governing board of a

nonprofit homeowners' association with property subject to taxation under this subsection shall

provide annually to each member of the association the amount of tax due on the property, the

value of the property, and, if applicable, the means by which the association will recover the tax

due on the property from the members.

(b) As used in this section, "nonprofit homeowners' association" means a homeowners'

association as defined in § 528(c) of the Internal Revenue Code, and "extraterritorial common

property" means real property that is (i) owned by a nonprofit homeowners association that

meets the requirements of subdivisions (1) through (3) of subsection (a) of this section and (ii)

entirely contained within a taxing jurisdiction that is different from that of the taxable real

property owned by members of the association and providing the appurtenant rights to use and

enjoy the association property. (1979, c. 686, s. 1; 1987, c. 130; 2012-157, s. 1.)

§ 105-277.9. Taxation of property inside certain roadway corridors.

Real property that lies within a transportation corridor marked on an official map filed under

Article 2E of Chapter 136 of the General Statutes is designated a special class of property under

Article V, Sec. 2(2) of the North Carolina Constitution and is taxable at twenty percent (20%) of

the appraised value of the property if each of the following requirements is met:

(1) As of January 1, no building or other structure is located on the property.

(2) The property has not been subdivided, as defined in G.S. 153A-335 or G.S.

160A-376, since it was included in the corridor. (1987, c. 747, s. 22;

1998-184, s. 2; 2011-30, s. 1.)


§ 105-277.9A. (See note for repeal) Taxation of improved property inside certain roadway

corridors.

(a) Reduced Assessment. – Real property on which a building or other structure is

located and that lies within a transportation corridor marked on an official map filed under

Article 2E of Chapter 136 of the General Statutes is designated a special class of property under

Section 2(2) of Article V of the North Carolina Constitution and is taxable at fifty percent (50%)

of the appraised value of the property if the property has not been subdivided, as defined in G.S.

153A-335 or G.S. 160A-376, since it was included in the corridor.

(b) Sunset. – This section is repealed effective for taxes imposed for taxable years

beginning on or after July 1, 2021. (2011-30, s. 2.)

§ 105-277.10. Taxation of precious metals used or held for use directly in manufacturing or

processing by a manufacturer.

Precious metals, including rhodium and platinum, used or held for use directly in

manufacturing or processing by a manufacturer as part of industrial machinery is designated a

special class of property under Article V, Sec. 2(2) of the North Carolina Constitution and shall

be assessed for taxation in accordance with this section. The classified property shall be assessed

at the lower of its true value or the manufacturer's original cost less depreciation. The original

cost of the classified property shall be adjusted by the index factor, if any, that applies in

assessing the industrial machinery with which the property is used, and the depreciable life of the

classified property shall be the life assigned to the industrial machinery with which the property

is used. The residual value of the classified property may not exceed twenty-five percent (25%)

of the manufacturer's original cost. (1989, c. 674, s. 1.)

§ 105-277.11. Taxation of property subject to a development financing district agreement.

Property that is in a development financing district established pursuant to G.S. 160A-515.1

or G.S. 158-7.3 and that is subject to an agreement entered into pursuant to G.S. 159-108, shall,

pursuant to Article V, Section 14 of the North Carolina Constitution, be assessed for taxation at

the greater of its true value or the minimum value established in the agreement.(2003-403, s. 21.)

§ 105-277.12. Antique airplanes.

(a) For the purpose of this section, the term "antique airplane" means an airplane that

meets all of the following conditions:

(1) It is registered with the Federal Aviation Administration and is a model year

1954 or older.

(2) It is maintained primarily for use in exhibitions, club activities, air shows, and

other public interest functions.

(3) It is used only occasionally for other purposes.

(4) It is used by the owner for a purpose other than the production of income.

(b) Antique airplanes are designated a special class of property under Article V, Sec. 2(2)

of the North Carolina Constitution and shall be assessed for taxation in accordance with this

section. An antique airplane shall be assessed at the lower of its true value or five thousand

dollars ($5,000). (1997-355, s. 1.)

§ 105-277.13. Taxation of improvements on brownfields.


(a) Qualifying improvements on brownfields properties are designated a special class of

property under Article V, Sec. 2(2) of the North Carolina Constitution and shall be appraised,

assessed, and taxed in accordance with this section. An owner of land is entitled to the partial

exclusion provided by this section for the first five taxable years beginning after completion of

qualifying improvements made after the later of July 1, 2000, or the date of the brownfields

agreement. After property has qualified for the exclusion provided by this section, the assessor

for the county in which the property is located shall annually appraise the improvements made to

the property during the period of time that the owner is entitled to the exclusion.

(b) For the purposes of this section, the terms "qualifying improvements on brownfields

properties" and "qualifying improvements" mean improvements made to real property that is

subject to a brownfields agreement entered into by the Department of Environmental Quality and

the owner pursuant to G.S. 130A-310.32.

(c) The following table establishes the percentage of the appraised value of the qualified

improvements that is excluded based on the taxable year:

Year Percent of Appraised Value Excluded

Year 1 90%

Year 2 75%

Year 3 50%

Year 4 30%

Year 5 10%.

(2000-158, s. 1; 2015-241, s. 14.30(u).)

§ 105-277.14. Taxation of working waterfront property.


(1) Coastal fishing waters. – Defined in G.S. 113-129.

(2) Commercial fishing operation. – Defined in G.S. 113-168.

(3) Fish processing. – Processing fish, as defined in G.S. 113-129, for sale.

(4) Working waterfront property. – Any of the following property that has, for the

most recent three-year period, produced an average gross income of at least

one thousand dollars ($1,000):

a. A pier that extends into coastal fishing waters and limits access to

those who pay a fee.

b. Real property that is adjacent to coastal fishing waters and is primarily

used for a commercial fishing operation or fish processing, including

adjacent land that is under improvements used for one of these

purposes.

(b) Classification. – Working waterfront property is designated a special class of property

under Section 2(2) of Article V of the North Carolina Constitution and must be appraised,

assessed, and taxed on the basis of the value of the property in its present use rather than on its

true value. Working waterfront property includes land reasonably necessary for the convenient

use of the property.

(c) Deferred Taxes. – The difference between the taxes that are due on working

waterfront property taxed on the basis of its present use and that would be due if the property

were taxed on the basis of its true value is a lien on the property. The difference in taxes must be

carried forward in the records of each taxing unit as deferred taxes. The deferred taxes for the

preceding three fiscal years are due and payable in accordance with G.S. 105-277.1F when the


property loses its eligibility for deferral as a result of a disqualifying event. A disqualifying event

occurs when the property no longer qualifies as working waterfront property.

(d) Repealed by Session Laws 2009-445, s. 23(b), effective August 7, 2009. (2007-485,

s. 1; 2008-35, s. 2.4; 2009-445, s. 23(b).)

§ 105-277.15. Taxation of wildlife conservation land.


(1) Business entity. – Defined in G.S. 105-277.2.

(2) Family business entity. – A business entity whose members are, directly or

indirectly, individuals and are relatives. An individual is indirectly a member

of a business entity if the individual is a member of a business entity or a

beneficiary of a trust that is part of the ownership structure of the business

entity.

(3) Family trust. – A trust that was created by an individual and whose

beneficiaries are, directly or indirectly, individuals who are the creator of the

trust or a relative of the creator. An individual is indirectly a beneficiary of a

trust if the individual is a beneficiary of another trust or a member of a

business entity that has a beneficial interest in the trust.

(4) Member. – Defined in G.S. 105-277.2.

(5) Relative. – Defined in G.S. 105-277.2.

(b) Classification. – Wildlife conservation land is designated a special class of property

under Article V, Section 2(2) of the North Carolina Constitution and must be appraised,

assessed, and taxed in accordance with this section. Wildlife conservation land classified under

this section must be appraised and assessed as if it were classified under G.S. 105-277.3 as

agricultural land.

(c) Requirements. – Land qualifies as wildlife conservation land if it meets the following

size, ownership, and use requirements:

(1) Size. – The land must consist of at least 20 contiguous acres.

(2) Ownership. – The land must be owned by an individual, a family business

entity, or a family trust and must have been owned by the same owner for the

previous five years, except as follows:

a. If the land is owned by a family business entity, the land meets the

ownership requirement if the land was owned by one or more

members of the family business entity for the required time.

b. If the land is owned by a family trust, the land meets the ownership

requirement if the land was owned by one or more beneficiaries of the

family trust for the required time.

c. If an owner acquires land that was classified as wildlife conservation

land under this section when it was acquired and the owner continues

to use the land as wildlife conservation land, then the land meets the

ownership requirement if the new owner files an application and signs

the wildlife habitat conservation agreement in effect for the property

within 60 days after acquiring the property.

(3) Use. – The land must meet all of the following requirements:

a. The land must be managed under a written wildlife habitat

conservation agreement with the North Carolina Wildlife Resources


Commission that is in effect as of January 1 of the year for which the

benefit of this section is claimed and that requires the owner to do one

or more of the following:

1. Protect an animal species that lives on the land and, as of

January 1 of the year for which the benefit of this section is

claimed, is on a North Carolina protected animal list published

by the Commission under G.S. 113-333.

2. Conserve any of the following priority animal wildlife habitats:

longleaf pine forest, early successional habitat, small wetland

community, stream and riparian zone, rock outcrop, or bat

cave.

b. It must have been classified under G.S. 105-277.3 when the wildlife

habitat conservation agreement was signed or the owner must

demonstrate to both the Wildlife Resources Commission and the

assessor that the owner used the land for a purpose specified in the

signed wildlife habitat conservation agreement for three years

preceding the January 1 of the year for which the benefit of this

section is claimed.

(d) Restrictions. – The following restrictions apply to the classification allowed under

this section:

(1) No more than 100 acres of an owner's land in a county may be classified

under this section.

(2) Land owned by a business entity is not eligible for classification under this

section if the business entity is a corporation whose shares are publicly traded

or one of its members is a corporation whose shares are publicly traded.

(e) Deferred Taxes. – The difference between the taxes that are due on wildlife

conservation land classified under this section and that would be due if the land were taxed on

the basis of its true value is a lien on the property. The difference in taxes must be carried

forward in the records of each taxing unit as deferred taxes. The deferred taxes for the preceding

three fiscal years are due and payable in accordance with G.S. 105-277.1F when the land loses

its eligibility for deferral as a result of a disqualifying event. A disqualifying event occurs when

the property no longer qualifies as wildlife conservation land.

(f) Exceptions to Payment. – No deferred taxes are due in the following circumstances

and the deferred taxes remain a lien on the land:

(1) When the owner of wildlife conservation land that was previously classified

under G.S. 105-277.3 before the wildlife habitat conservation agreement was

signed does not transfer the land and the land again becomes eligible for

classification under G.S. 105-277.3. In this circumstance, the deferred taxes

are payable in accordance with G.S. 105-277.3.

(2) When land that is classified under this section is transferred to an owner who

signed the wildlife habitat conservation agreement in effect for the land at the

time of the transfer and the land remains classified under this section. In this

circumstance, the deferred taxes are payable in accordance with this section.

(g) Exceptions to Payment and Lien. – Notwithstanding subsection (e) of this section, if

land loses its eligibility for deferral solely due to one of the following reasons, no deferred taxes

are due and the lien for the deferred taxes is extinguished:


(1) The property is conveyed by gift to a nonprofit organization and qualifies for

exclusion from the tax base under G.S. 105-275(12) or G.S. 105-275(29).

(2) The property is conveyed by gift to the State, a political subdivision of the

State, or the United States.

(h) Administration. – An owner who applies for the classification allowed under this

section must attach a copy of the owner's written wildlife habitat agreement required under

subsection (c) of this section. An owner who fails to notify the county assessor when land

classified under this section loses its eligibility for classification is subject to a penalty in the

amount set in G.S. 105-277.5. (2008-171, s. 1.)

§ 105-277.15A. (Effective for taxes imposed for taxable years beginning on or after July 1,

2013) Taxation of site infrastructure land.

(a) Classification. – Site infrastructure land is designated a special class of property

under Section 2(2) of Article V of the North Carolina Constitution and must be appraised,

assessed, and taxed in accordance with this section.

(b) (Effective for taxes imposed for taxable years beginning before July 1, 2015)

Requirements. – Land qualifies as site infrastructure land if it meets the following size and use

requirements:



a. It must be zoned for industrial use, office use, or both.

b. A building permit for a primary building or structure must not have

been issued for the land, and there is no primary building or structure

on the land.

c. It must be classified under G.S. 105-277.3 or have been classified

under G.S. 105-277.3 within the previous six months.

(b) (Effective for taxes imposed for taxable years beginning on or after July 1, 2015)

Requirements. – Land qualifies as site infrastructure land if it meets the following size and use

requirements:



a. It must be zoned for industrial use, office use, or both.

b. A building permit for a primary building or structure must not have

been issued for the land, and there is no primary building or structure

on the land.

(c) (Effective for taxes imposed for taxable years beginning before July 1, 2015)

Deferred Taxes. – An owner may defer a portion of tax imposed on site infrastructure land that

represents the sum of the increase in value of the property attributable solely to improvements

made to the site infrastructure land, if any, and the difference between the true value of the site

infrastructure land and the value of the site infrastructure land as if it were classified under G.S.

105-277.3 as agricultural land. The difference between the taxes due under this section and the

taxes that would have been payable in the absence of this section is a lien on the site

infrastructure land as provided in G.S. 105-355(a). The difference in taxes must be carried

forward in the records of each taxing unit as deferred taxes. The deferred taxes are due and

payable in accordance with G.S. 105-277.1F when the site infrastructure land loses its eligibility

for deferral because of the occurrence of a disqualifying event as follows:


(1) The deferred taxes for the preceding five fiscal years are due and payable

when an amount equal to the deferred taxes is not invested in improvements to

make the land suitable for industrial use, office use, or both within five years

from the first day of the fiscal year the property was classified under this

section.


when the minimum investment required by subdivision (1) of this subsection

is timely made, but the land has been classified under this section for 10 years.

(3) All deferred taxes are due and payable when some or all of the site

infrastructure land is rezoned for a use other than for industrial use, office use,

or both.

(4) The deferred taxes for the preceding year are due and payable when the land is

transferred or when a building permit for a primary building or structure for

the land is issued.

(c) (Effective for taxes imposed for taxable years beginning on or after July 1, 2015)

Deferred Taxes. – An owner may defer a portion of tax imposed on site infrastructure land that

represents the sum of the following: (i) the increase in value of the property attributable solely to

improvements made to the site infrastructure land, if any, and (ii) the difference between the true

value of the site infrastructure land as it is currently zoned and the value of the site infrastructure

land as if it were zoned the same as it was in the calendar year prior to the time the application

for property tax relief under this section was filed.

The difference between the taxes due under this section and the taxes that would have been

payable in the absence of this section is a lien on the site infrastructure land as provided in G.S.

105-355(a). The difference in taxes must be carried forward in the records of each taxing unit as

deferred taxes. The deferred taxes are due and payable in accordance with G.S. 105-277.1F when

the site infrastructure land loses its eligibility for deferral because of the occurrence of a

disqualifying event as follows:


when an amount equal to the deferred taxes is not invested in improvements to

make the land suitable for industrial use, office use, or both within five years

from the first day of the fiscal year the property was classified under this

section.


when the minimum investment required by subdivision (1) of this subsection

is timely made, but the land has been classified under this section for 10 years.

(3) All deferred taxes are due and payable when some or all of the site

infrastructure land is rezoned for a use other than for industrial use, office use,

or both.

(4) The deferred taxes for the preceding year are due and payable when the land is

transferred or when a building permit for a primary building or structure for

the land is issued.

(d) Notice. – On or before September 1 of each year, the collector shall notify each

owner to whom a tax deferral has previously been granted of the accumulated sum of deferred

taxes and interest. An owner who fails to notify the county assessor when land classified under

this section loses its eligibility for classification is subject to a penalty in the amount set in G.S.

105-277.5.


(e) Exception to Payment. – No deferred taxes are due in the following circumstances,

and the deferred taxes remain a lien on the land:

(1) When the owner of site infrastructure land that was previously classified

under G.S. 105-277.3 does not transfer the land, and the land again becomes

eligible for classification under G.S. 105-277.3. In this circumstance, the

deferred taxes are payable in accordance with G.S. 105-277.3.

(2) When a portion of the site infrastructure land is transferred for industrial use,

office use, or both or has issued for the land a building permit for a primary

building or structure for industrial use, office use, or both, and the remainder

of the site infrastructure land no longer meets the size requirement of this

section. In this circumstance, the deferred taxes for the remainder are payable

in accordance with this section without application of the size requirement of

subdivision (b)(1) of this section.

(f) Application. – An application for property tax relief provided by this section should

be filed during the regular listing period but may be filed after the regular listing period upon a

showing of good cause by the applicant for failure to make a timely application, as determined

and approved by the board of equalization and review or, if that board is not in session, by the

board of county commissioners. An untimely application approved under this subsection applies

only to property taxes levied by the county or municipality in the calendar year in which the

untimely application is filed. Decisions of the county board may be appealed to the Property Tax

Commission. Persons may apply for this property tax relief by entering the appropriate

information on a form made available by the assessor under G.S. 105-282.1. An application for

property tax relief provided by this section may not be approved for any portion of site

infrastructure land which has previously lost eligibility for the program.

(g) Report. – On August 1 of each year, the Secretary shall report to the Department of

Commerce the number and location of site infrastructure lands qualified under this section.

(2013-130, s. 1; 2014-39, s. 2(a).)

§ 105-277.16. Taxation of low-income housing property.

A North Carolina low-income housing development to which the North Carolina Housing

Finance Agency allocated a federal tax credit under section 42 of the Code is designated a

special class of property under Article V, Section 2(2) of the North Carolina Constitution and

must be appraised, assessed, and taxed in accordance with this section. The assessor must use the

income approach as the method of valuation for property classified under this section and must

take rent restrictions that apply to the property into consideration in determining the income

attributable to the property. The assessor may not consider income tax credits received under

section 42 of the Code or under G.S. 105-129.42 in determining the income attributable to the

property. (2008-146, s. 3.1; 2008-187, s. 47.6.)

§ 105-277.17. Taxation of community land trust property.

(a) Classification. – Community land trust property is designated a special class of

property under Section 2(2) of Article V of the North Carolina Constitution and must be

appraised, assessed, and taxed in accordance with this section.



(1) Community land trust developer. – A nonprofit housing development entity

that is an exempt organization under section 501(c)(3) of the Code and that

transfers community land trust property to a qualifying owner.

(2) Community land trust property. – Improvements to real property that meet all

of the following conditions:

a. A fee or leasehold interest in the improvements is transferred subject

to resale restrictions contained in a long-term ground lease of not less

than 99 years.

b. The community land trust developer retains an interest in the property

pursuant to the deed of conveyance or the long-term ground lease.

(3) Ground lease. – A lease between the community land trust developer of a

dwelling site, as landlord, and the owner or lessee of a permanent residence

constructed on the dwelling site, as tenant. The leasehold interest of the tenant

in the dwelling site includes an undivided interest and nonexclusive easement

for ingress and egress to the dwelling site and for the use and enjoyment of the

common areas and community facilities, if any.

(4) Income. – Defined in G.S. 105-277.1(b).

(5) Initial investment basis. – The most recent sales price, excluding any silent

mortgage amount, of community land trust property.

(6) Qualifying owner. – A North Carolina resident who (i) occupies, as owner or

lessee, community land trust property as a permanent residence and (ii) is part

of a household, the annual income of which at the time of transfer and

adjusted for family size is not more than one hundred percent (100%) of the

local area median family income as defined by the most recent figures

published by the U.S. Department of Housing and Urban Development.

(7) Resale restrictions. – Binding restrictions that affect the price at which a

qualifying owner's interest in community land trust property can be

transferred for value to a subsequent qualifying owner or the community land

trust developer.

(8) Silent mortgage amount. – The amount of debt incurred by a qualifying owner

that is represented by a deed of trust or leasehold deed of trust on community

land trust property and that earns no interest and requires no repayment prior

to satisfaction of any interest-earning mortgage or a subsequent transfer of the

property, whichever occurs first.

(9) Transfer. – Any method of disposing of an interest in real property.

(c) Valuation. – The initial appraised value of community land trust property in the year

the property first qualifies for classification under this section is the initial investment basis. In

subsequent general reappraisals, the value of the community land trust property shall not exceed

the sum of the restricted capital gain amount and the initial investment basis. The restricted

capital gain amount is the market value of the community land trust property that would be

established for the current general reappraisal if not for this classification (i) adjusted to the

maximum sales price permitted pursuant to the resale restrictions effective for a hypothetical sale

occurring on the date of reappraisal, if less, and (ii) subtracting the initial investment basis and

any silent mortgage amount. (2009-481, s. 1.)

§ 105-278. Historic properties.


(a) Real property designated as a historic property by a local ordinance adopted pursuant

to former G.S. 160A-399.4 or designated as a historic landmark by a local ordinance adopted

pursuant to G.S. 160A-400.5 is designated a special class of property under authority of Article

V, Sec. 2(2) of the North Carolina Constitution. Property so classified shall be taxed uniformly

as a class in each local taxing unit on the basis of fifty percent (50%) of the true value of the

property as determined pursuant to G.S. 105-285 and 105-286, or 105-287.

(b) The difference between the taxes due on the basis of fifty percent (50%) of the true

value of the property and the taxes that would have been payable in the absence of the

classification provided for in subsection (a) shall be a lien on the property of the taxpayer as

provided in G.S. 105-355(a). The taxes shall be carried forward in the records of the taxing unit

or units as deferred taxes. The deferred taxes for the preceding three fiscal years are due and

payable in accordance with G.S. 105-277.1F when the property loses the benefit of this

classification as a result of a disqualifying event. A disqualifying event occurs when there is a

change in an ordinance designating a historic property or a change in the property, other than by

fire or other natural disaster, that causes the property's historical significance to be lost or

substantially impaired. In addition to the provisions in G.S. 105-277.1F, no deferred taxes are

due and all liens arising under this subsection are extinguished when the property's historical

significance is lost or substantially impaired due to fire or other natural disaster. (1977, c. 869, s.

2; 1981, c. 501; 1989, c. 706, s. 3.1; 2005-435, s. 38; 2006-162, s. 28; 2008-35, s. 2.5; 2010-95,

s. 17.)

§ 105-278.1. Exemption of real and personal property owned by units of government.

(a) Real and personal property owned by the United States and, by virtue of federal law,

not subject to State and local taxes shall be exempted from taxation.

(b) Real and personal property belonging to the State, counties, and municipalities is

exempt from taxation.

(c) For purposes of this section:

(1) A specified unit of government (federal, State, or local) includes its

departments, institutions, and agencies.

(2) By way of illustration but not by way of limitation, the following boards,

commissions, authorities, and institutions are units of State government:

a. The State Marketing Authority established by G.S. 106-529.

b. The Board of Governors of the University of North Carolina

incorporated under the provisions of G.S. 116-3 and known as "The

University of North Carolina."

c. The North Carolina Museum of Art made an agency of the State under

G.S. 140-5.12.

(3) By way of illustration but not by way of limitation, the following boards,

commissions, authorities, and institutions are units of local government of this

State:

a. An airport authority, board, or commission created as a separate and

independent body corporate and politic by an act of the General

Assembly.

b. An airport authority, board, or commission created as a separate and

independent body corporate and politic by one or more counties or


municipalities or combinations thereof under the authority of an act of

the General Assembly.

c. A hospital authority created under G.S. 131E-17.

d. A housing authority created under G.S. 157-4 or G.S. 157- 4.1.

e. A municipal parking authority created under G.S. 160-477.

f. A veterans' recreation authority created under G.S. 165-26. (1973, c.

695, s. 4; 1987, c. 777, s. 1; 2005-435, s. 39.)

§ 105-278.2. Burial property.

(a) Real property set apart for burial purposes shall be exempted from taxation unless it is

owned and held for purposes of (i) sale or rental or (ii) sale of burial rights therein.

(b) Taxable real property set apart for human burial purposes is hereby designated a

special class of property under authority of Article V, Section 2(2) of the North Carolina

Constitution, and it shall be assessed for taxation taking into consideration the following:

(1) The effect on its value by division and development into burial plots;

(2) Whether it is irrevocably dedicated for human burial purposes by plat

recorded with the Register of Deeds in the county in which the land is located;

and

(3) Whether the owner is prohibited or restricted by law or otherwise from

selling, mortgaging, leasing or encumbering the same.

(c) For purposes of this section, the term "real property" includes land, tombs, vaults,

monuments, and mausoleums, and the term "burial" includes entombment. (1973, c. 695, s. 4;

1987, c. 724.)

§ 105-278.3. Real and personal property used for religious purposes.

(a) Buildings, the land they actually occupy, and additional adjacent land reasonably

necessary for the convenient use of any such building shall be exempted from taxation if wholly

owned by an agency listed in subsection (c), below, and if:

(1) Wholly and exclusively used by its owner for religious purposes as defined in

subsection (d)(1), below; or

(2) Occupied gratuitously by one other than the owner and wholly and

exclusively used by the occupant for religious, charitable, or nonprofit

educational, literary, scientific, or cultural purposes.

(b) Personal property shall be exempted from taxation if wholly owned by an agency

listed in subsection (c), below, and if:

(1) Wholly and exclusively used by its owner for religious purposes; or

(2) Gratuitously made available to one other than the owner and wholly and

exclusively used by the possessor for religious, charitable, or nonprofit

educational, literary, scientific, or cultural purposes.

(c) The following agencies, when the other requirements of this section are met, may

obtain exemption for their properties:

(1) A congregation, parish, mission, or similar local unit of a church or religious

body; or

(2) A conference, association, presbytery, diocese, district, synod, or similar unit

comprising local units of a church or religious body.

(d) Within the meaning of this section:


(1) A religious purpose is one that pertains to practicing, teaching, and setting

forth a religion. Although worship is the most common religious purpose, the

term encompasses other activities that demonstrate and further the beliefs and

objectives of a given church or religious body. Within the meaning of this

section, the ownership and maintenance of a general or promotional office or

headquarters by an owner listed in subdivision (2) of subsection (c), above, is

a religious purpose and the ownership and maintenance of residences for

clergy, rabbis, priests or nuns assigned to or serving a congregation, parish,

mission or similar local unit, or a conference, association, presbytery, diocese,

district, synod, province or similar unit of a church or religious body or

residences for clergy on furlough or unassigned, is also a religious purpose.

However, the ownership and maintenance of residences for other employees is

not a religious purpose for either a local unit of a church or a religious body or

a conference, association, presbytery, diocese, district, synod, or similar unit

of a church or religious body. Provided, however, that where part of property

which otherwise qualifies for the exemption provided herein is made available

as a residence for an individual who provides guardian, janitorial and

custodial services for such property, or who oversees and supervises

qualifying activities upon and in connection with said property, the entire

property shall be considered as wholly and exclusively used for a religious

purpose.

(2) A charitable purpose is one that has humane and philanthropic objectives; it is

an activity that benefits humanity or a significant rather than limited segment

of the community without expectation of pecuniary profit or reward. The

humane treatment of animals is also a charitable purpose.

(3) An educational purpose is one that has as its objective the education or

instruction of human beings; it comprehends the transmission of information

and the training or development of the knowledge or skills of individual

persons.

(4) A literary purpose is one that pertains to letters or literature, especially

writing, publishing, and the study of literature. It includes the literature of the

stage and screen as well as the performance or exhibition of works based on

literature.

(5) A cultural purpose is one that is conducive to the enlightenment and

refinement of taste acquired through intellectual and aesthetic training,

education, and discipline.

(6) A scientific purpose is one that yields knowledge systematically through

research, experimentation or other work done in one or more of the natural

sciences.

(e) (Repealed effective for taxes imposed for taxable years beginning on or after

July 1, 2015.) Notwithstanding the exclusive-use requirement of subsection (a), above, if part of

a property that otherwise meets that subsection's requirements is used for a purpose that would

require exemption if the entire property were so used, the valuation of the part so used shall be

exempted from taxation.


(f) The fact that a building or facility is incidentally available to and patronized by the

general public, so long as there is no material amount of business or patronage with the general

public, shall not defeat the exemption granted by this section.

(g) (Effective for taxes imposed for taxable years before July 1, 2015.)

Notwithstanding the exclusive-use requirement of subsection (a), above, any parking lot wholly

owned by an agency listed in subsection (c), above, may be used for parking without removing

the tax exemption granted in this section; provided, the total charge for said uses shall not exceed

that portion of the actual maintenance expenditures for the parking lot reasonably estimated to

have been made on account of said uses. This subsection shall apply beginning with the taxable

year that commences on January 1, 1978.

(g) (Effective for taxes imposed for taxable years beginning on or after July 1, 2015.)

The following exceptions apply to the exclusive-use requirement of subsection (a) of this

section:

(1) If part, but not all, of a property meets the requirements of subsection (a) of

this section, the valuation of the part so used is exempt from taxation.

(2) Any parking lot wholly owned by an agency listed in subsection (c) of this

section may be used for parking without removing the tax exemption granted

in this section if the total charge for parking uses does not exceed that portion

of the actual maintenance expenditures for the parking lot reasonably

estimated to have been made on account of parking uses. This subsection shall

apply beginning with the taxable year that commences on January 1, 1978.

(3) A building and the land occupied by the building is exempt from taxation if it

is under construction and intended to be wholly and exclusively used by its

owner for religious purposes upon completion. For purposes of this

subdivision, a building is under construction starting when a building permit is

issued and ending at the earlier of (i) 90 days after a certificate of occupancy

is issued or (ii) 180 days after the end of active construction. (1973, c. 695, s.

4; c. 1421; 1975, c. 848; 1977, c. 867; 2005-435, s. 59(a); 2015-185, s. 1(a).)

§ 105-278.4. Real and personal property used for educational purposes.

(a) Buildings. – Buildings, the land they actually occupy, and additional land reasonably

necessary for the convenient use of any such building shall be exempted from taxation if all of

the following requirements are met:

(1) Owned by either of the following:

a. An educational institution; or

b. (Effective until July 1, 2012) A nonprofit entity for the sole benefit of

a constituent or affiliated institution of The University of North

Carolina, an institution as defined in G.S. 116-22, a North Carolina

community college, or a combination of these;

b. (Effective July 1, 2012) A nonprofit entity for the sole benefit of a

constituent or affiliated institution of The University of North

Carolina, a nonprofit postsecondary educational institution as

described in G.S. 116-280, a North Carolina community college, or a

combination of these;

(2) The owner is not organized or operated for profit and no officer, shareholder,

member, or employee of the owner or any other person is entitled to receive


pecuniary profit from the owner's operations except reasonable compensation

for services;

(3) Of a kind commonly employed in the performance of those activities naturally

and properly incident to the operation of an educational institution such as the

owner; and

(4) Wholly and exclusively used for educational purposes by the owner or

occupied gratuitously by another nonprofit educational institution and wholly

and exclusively used by the occupant for nonprofit educational purposes.

(b) Land. – Land (exclusive of improvements); and improvements other than buildings,

the land actually occupied by such improvements, and additional land reasonably necessary for

the convenient use of any such improvement shall be exempted from taxation if:

(1) Owned by an educational institution that owns real property entitled to

exemption under the provisions of subsection (a), above;

(2) Of a kind commonly employed in the performance of those activities naturally

and properly incident to the operation of an educational institution such as the

owner; and

(3) Wholly and exclusively used for educational purposes by the owner or

occupied gratuitously by another nonprofit educational institution (as defined

herein) and wholly and exclusively used by the occupant for nonprofit

educational purposes.

(c) Partial Exemption. – Notwithstanding the exclusive-use requirements of subsections

(a) and (b), above, if part of a property that otherwise meets the requirements of one of those

subsections is used for a purpose that would require exemption if the entire property were so

used, the valuation of the part so used shall be exempted from taxation.

(d) Public Use. – The fact that a building or facility is incidentally available to and

patronized by the general public, so long as there is no material amount of business or patronage

with the general public, does not defeat the exemption granted by this section.

(e) Personal Property. – Personal property owned by a church, a religious body, or an

educational institution shall be exempted from taxation if:

(1) The owner is not organized or operated for profit, and no officer, shareholder,

member, or employee of the owner, or any other person is entitled to receive

pecuniary profit from the owner's operations except reasonable compensation

for services; and

(2) Used wholly and exclusively for educational purposes by the owner or held

gratuitously by a church, religious body, or nonprofit educational institution

other than the owner, and wholly and exclusively used for nonprofit

educational purposes by the possessor.

(f) Definitions. – The following definitions apply in this section:

(1) Educational institution. – The term includes a university, a college, a school, a

seminary, an academy, an industrial school, a public library, a museum, and

similar institutions.

(2) Educational purpose. – A purpose that has as its objective the education or



persons. The operation of a student housing facility, a student dining facility, a

golf course, a tennis court, a sports arena, a similar sport property, or a similar


recreational sport property for the use of students or faculty is also an

educational purpose, regardless of the extent to which the property is also

available to and patronized by the general public. (1973, c. 695, s. 4; 1991

(Reg. Sess., 1992), c. 926, s. 1; 2004-173, s. 1; 2011-145, s. 9.18(f).)

§ 105-278.5. Real and personal property of religious educational assemblies used for

religious and educational purposes.

(a) Buildings, the land they actually occupy, and additional adjacent land reasonably

necessary for the convenient use of any such building or for the religious educational programs

of the owner, shall be exempted from taxation if:

(1) Owned by a religious educational assembly, retreat, or similar organization;

(2) No officer, shareholder, member, or employee of the owner, or any other

person is entitled to receive pecuniary profit from the owner's operations

except reasonable compensation for services; and

(3) Of a kind commonly employed in those activities naturally and properly

incident to the operation of a religious educational assembly such as the

owner; and

(4) Wholly and exclusively used for

a. Religious worship or

b. Purposes of instruction in religious education.

(b) Notwithstanding the exclusive-use requirement of subsection (a), above, if part of a

property that otherwise meets the subsection's requirements is used for a purpose that would



(c) The fact that a building or facility is incidentally available to and patronized by the



(d) Personal property owned by a religious educational assembly, retreat, or similar

organization shall be exempted from taxation if it is exclusively maintained and used in

connection with real property granted exemption under the provisions of subsection (a) or (b),

above. (1973, c. 695, s. 4.)

§ 105-278.6. Real and personal property used for charitable purposes.

(a) Real and personal property owned by:

(1) A Young Men's Christian Association or similar organization;

(2) A home for the aged, sick, or infirm;

(3) An orphanage or similar home;

(4) A Society for the Prevention of Cruelty to Animals;

(5) A reformatory or correctional institution;

(6) A monastery, convent, or nunnery;

(7) A nonprofit, life-saving, first aid, or rescue squad organization;

(8) A nonprofit organization providing housing for individuals or families with

low or moderate incomes

shall be exempted from taxation if: (i) As to real property, it is actually and exclusively occupied

and used, and as to personal property, it is entirely and completely used, by the owner for

charitable purposes; and (ii) the owner is not organized or operated for profit.


(b) A charitable purpose within the meaning of this section is one that has humane and

philanthropic objectives; it is an activity that benefits humanity or a significant rather than

limited segment of the community without expectation of pecuniary profit or reward. The


(c) The fact that a building or facility is incidentally available to and patronized by the



(d) Notwithstanding the exclusive-use requirements of this section, if part of a property

that otherwise meets the section's requirements is used for a purpose that would require

exemption under subsection (a), above, if the entire property were so used, the valuation of the

part so used shall be exempted from taxation.

(e) Real property held by an organization described in subdivision (a)(8) for a charitable

purpose under this section as a future site for housing for individuals or families with low or

moderate incomes may be classified under this section for no more than 10 years. The taxes that

would otherwise be due on real property exempt under this subsection shall be a lien on the

property as provided in G.S. 105-355(a). The taxes shall be carried forward in the records of the

taxing unit as deferred taxes. The deferred taxes are due and payable in accordance with G.S.

105-277.1F when the property loses its eligibility for deferral as a result of a disqualifying event.

A disqualifying event occurs when the property was not used for low- or moderate-income

housing within 10 years from the first day of the fiscal year the property was classified under this

subsection. In addition to the provisions in G.S. 105-277.1F, all liens arising under this

subdivision are extinguished when the property is used for low- or moderate-income housing

within the time period allowed under this subsection. (1973, c. 695, s. 4; 1975, c. 808; 1993, c.

230, s. 1; 2008-35, s. 2.6; 2009-481, s. 2; 2010-95, s. 18; 2011-368, s. 1.)

§ 105-278.6A. Qualified retirement facility.

(a) Classification. – Buildings, the land they actually occupy, additional adjacent land

reasonably necessary for the convenient use of the buildings, and personal property owned by a

qualified retirement facility and used in the operation of that facility are designated a special

class of property under Section 2(2) of Article V of the North Carolina Constitution and are

excluded from taxation to the extent provided in this section.

(b) Definitions. – The following definitions apply in section:

(1) Charity care. – The unreimbursed costs to the facility of providing health care,

housing, or other services to a resident who is uninsured, underinsured, or

otherwise unable to pay for all or part of the services rendered.

(2) Community benefits. – The unreimbursed costs to the facility of providing the

following:

a. Services, including health, recreation, community research, and

education activities provided to the community at large, including the

elderly.

b. Charitable donations.

c. Donated volunteer services.

d. Donations and voluntary payments to government agencies.

(3) Financial reporting period. – The calendar year or tax year ending prior to the

date the retirement facility applies for an exclusion under this section.


(4) Resident revenue. – Annual revenue paid by a resident for goods and services

and one year's share of the initial resident fee amortized in accordance with

generally accepted accounting principles.

(5) Retirement facility. – A community that meets all of the following conditions:

a. It is licensed under Article 64 of Chapter 58 of the General Statutes.

b. It is designed for elderly residents.

c. It includes independent living units for elderly residents.

d. It includes a skilled nursing facility or an adult care facility.

(6) Unreimbursed costs. – The costs a facility incurs for providing charity care or

community benefits after subtracting payment or reimbursement received

from any source for the care or benefits. Unreimbursed costs include costs

paid from funds generated by a program described in subdivision (c)(5) of this

section.

(c) Total Exclusion. – A retirement facility qualifies for total exclusion under this section

if it meets all of the following conditions:

(1) It is exempt from tax under Article 4 of this Chapter and private shareholders

do not benefit from its operations.

(2) All of its revenues, less operating and capital expenses, are applied to

providing uncompensated goods and services to the elderly and to the local

community, or are applied to an endowment or a reserve for these purposes.

(3) Its charter provides that in the event of dissolution, its assets will revert or be

conveyed to an entity that is organized exclusively for charitable, educational,

scientific, or religious purposes, and is an exempt organization under section

501(c)(3) of the Code.

(4) Repealed by Session Laws 2001-17, s. 1, effective July 1, 2001.

(5) It has an active program to generate funds through one or more sources, such

as gifts, grants, trusts, devises, endowment, or an annual giving program, to

assist the retirement facility in serving persons who might not be able to reside

there without financial assistance or subsidy.

(6) It meets at least one of the following conditions:

a. The facility serves all residents without regard to the residents' ability

to pay.

b. At least five percent (5%) of the facility's resident revenue for the

financial reporting period is provided in charity care to its residents, in

community benefits, or in both.

(d) Partial Exclusion. – A retirement facility qualifies for a partial exclusion under this

subsection if it meets conditions under subdivisions (c) (1) through (c)(5) of this section and at

least one percent (1%) of the facility's resident revenue for the financial reporting period is

provided in charity care to its residents, in community benefits, or in both. The percentage of the

retirement facility's assessed value that is excluded from taxation is the applicable percentage

provided in the following table, based on the minimum percentage of the facility's resident

revenue that it provides in charity care to its residents, in community benefits, or in both:

Minimum Percentage of

Partial Exclusion Resident Revenue

80% 4%

60% 3%


40% 2%

20% 1%

(e) Application for Exclusion. – The application requirements of G.S. 105-282.1 apply to

this section. (1939, c. 310, s. 303; 1961, c. 1169, s. 8; 1967, c. 1185; 1971, c. 806, s. 1; c. 1121,

s. 3; 1973, cc. 290, 451; c. 476, s. 128; c. 484; c. 695, s. 1; c. 790, s. 1; cc. 904, 962, 1028, 1034,

1077; c. 1262, s. 23; c. 1264, s. 1; 1975, cc. 566, 755; c. 764, s. 6; 1977, c. 771, s. 4; c. 782, s. 2;

c. 1001, ss. 1, 2; 1977, 2nd Sess., c. 1200, s. 4; 1979, c. 200, s. 1; 1979, 2nd Sess., c. 1092; 1981,

c. 86, s. 1; 1981 (Reg. Sess., 1982), c. 1244, ss. 1, 2; 1983, c. 643, ss. 1, 2; c. 693; 1983 (Reg.

Sess., 1984), c. 1060; 1985, c. 510, s. 1; c. 656, s. 37; 1985 (Reg. Sess., 1986), c. 982, s. 18;

1987, c. 356; c. 622, s. 2; c. 747, s. 8; c. 777, s. 6; c. 813, ss. 5, 6, 22; c. 850, s. 17; 1987 (Reg.

Sess., 1988), c. 1041, s. 1.1; 1989, c. 148, s. 4; c. 168, s. 6; c. 705; c. 723, s. 1; c. 727, ss. 28, 29;

1991, c. 717, s. 1; 1991 (Reg. Sess., 1992), c. 975, s. 2; 1993, c. 459, s. 2; 1993 (Reg. Sess.,

1994), c. 745, s. 39; 1995, c. 41, s. 2; c. 509, s. 51; 1995 (Reg. Sess., 1996), c. 646, s. 12;

1997-23, ss. 1, 3, 9; 1997-443, s. 11A.119(a); 1997-456, s. 27; 1998-55, ss. 10, 18; 1998-212, s.

29A.18(a); 1999-191, s. 1; 2000-20, s. 2; 2001-17, s. 1; 2011-284, s. 70.)

§ 105-278.7. Real and personal property used for educational, scientific, literary, or

charitable purposes.

(a) Buildings, the land they actually occupy, and additional adjacent land necessary for

the convenient use of any such building shall be exempted from taxation if wholly owned by an

agency listed in subsection (c), below, and if:

(1) Wholly and exclusively used by its owner for nonprofit educational, scientific,

literary, or charitable purposes as defined in subsection (f), below; or

(2) Occupied gratuitously by an agency listed in subsection (c), below, other than

the owner, and wholly and exclusively used by the occupant for nonprofit

educational, scientific, literary, charitable, or cultural purposes.

(b) Personal property shall be exempted from taxation if wholly owned by an agency

listed in subsection (c), below, and if:

(1) Wholly and exclusively used by its owner for nonprofit educational, scientific,

literary, or charitable purposes; or

(2) Gratuitously made available to an agency listed in subsection (c), below, other

than the owner, and wholly and exclusively used by the possessor for

nonprofit educational, scientific, literary, or charitable purposes.

(c) The following agencies, when the other requirements of this section are met, may

obtain property tax exemption under this section:

(1) A charitable association or institution,

(2) An historical association or institution,

(3) A veterans' organization or association,

(4) A scientific association or institution,

(5) A literary association or institution,

(6) A benevolent association or institution, or

(7) A nonprofit community or neighborhood organization.

(d) Notwithstanding the exclusive-use requirements of subsection (a), above, if part of a

property that otherwise meets the subsection's requirements is used for a purpose that would




(e) The fact that a building or facility is incidentally available to and patronized by the



(f) Within the meaning of this section:

(1) An educational purpose is one that has as its objective the education or



persons.

(2) A scientific purpose is one that yields knowledge systematically through

research, experimentation, or other work done in one or more of the natural

sciences.

(3) A literary purpose is one that pertains to letters or literature, especially

writing, publishing, and the study of literature. It includes the literature of the

stage and screen as well as the performance or exhibition of works based on

literature.

(4) A charitable purpose is one that has humane and philanthropic objectives; it is

an activity that benefits humanity or a significant rather than limited segment

of the community without expectation of pecuniary profit or reward. The


(5) A cultural purpose is one that is conducive to the enlightenment and

refinement of taste acquired through intellectual and aesthetic training,

education, and discipline. (1973, c. 695, s. 4; 1995 (Reg. Sess., 1996), c. 646,

s. 15; 2005-435, ss. 59(b), 59(c).)

§ 105-278.8. Real and personal property used for charitable hospital purposes.

(a) Real and personal property held for or owned by a hospital organized and operated as

a nonstock, nonprofit, charitable institution (without profit to members or their successors) shall

be exempted from taxation if actually and exclusively used for charitable hospital purposes.

(b) Notwithstanding the exclusive-use requirements of subsection (a), above, if part of a

property that otherwise meets that subsection's requirements is used for a purpose that would

require exemption under that subsection if the entire property were so used, the valuation of the

part so used shall be exempted from taxation.

(c) Within the meaning of this section, a charitable hospital purpose is a hospital purpose

that has humane and philanthropic objectives; it is a hospital activity that benefits humanity or a

significant rather than limited segment of the community without expectation of pecuniary profit

or reward. However, the fact that a qualifying hospital charges patients who are able to pay for

services rendered does not defeat the exemption granted by this section. (1973, c. 695, s. 4.)

§ 105-278.9. Repealed by Session Laws 1985 (Reg. Sess., 1986), c. 982, s. 21.






§ 105-282.1. Applications for property tax exemption or exclusion; annual review of

property exempted or excluded from property tax.

(a) Application. – Every owner of property claiming exemption or exclusion from

property taxes under the provisions of this Subchapter has the burden of establishing that the

property is entitled to it. If the property for which the exemption or exclusion is claimed is

appraised by the Department of Revenue, the application shall be filed with the Department.

Otherwise, the application shall be filed with the assessor of the county in which the property is

situated. An application must contain a complete and accurate statement of the facts that entitle

the property to the exemption or exclusion and must indicate the municipality, if any, in which

the property is located. Each application filed with the Department of Revenue or an assessor

shall be submitted on a form approved by the Department. Application forms shall be made

available by the assessor and the Department, as appropriate.

Except as provided below, an owner claiming an exemption or exclusion from property taxes

must file an application for the exemption or exclusion annually during the listing period.

(1) No application required. – Owners of the following exempt or excluded

property do not need to file an application for the exemption or exclusion to

be entitled to receive it:

a. Property exempt from taxation under G.S. 105-278.1 or G.S.

105-278.2.

b. Special classes of property excluded from taxation under G.S.

105-275(15), (16), (26), (31), (32a), (33), (34), (37), (40), (42), or (44).

c. Property classified for taxation at a reduced valuation under G.S.

105-277(g) or G.S. 105-277.9.

(2) Single application required. – An owner of one or more of the following

properties eligible for a property tax benefit must file an application for the

benefit to receive it. Once the application has been approved, the owner does

not need to file an application in subsequent years unless new or additional

property is acquired or improvements are added or removed, necessitating a

change in the valuation of the property, or there is a change in the use of the

property or the qualifications or eligibility of the taxpayer necessitating a

review of the benefit.

a. Property exempted from taxation under G.S. 105-278.3, 105-278.4,

105-278.5, 105-278.6, 105-278.7, or 105-278.8.

b. Special classes of property excluded from taxation under G.S.

105-275(3), (7), (8), (12), (17), (18), (19), (20), (21), (31e), (35), (36),

(38), (39), (41), or (45) or under G.S. 131A-21.

c. Special classes of property classified for taxation at a reduced

valuation under G.S. 105-277(h), 105-277.1, 105-277.1C, 105-277.10,

105-277.13, 105-277.14, 105-277.15, 105-277.17, or 105-278.

d. Property owned by a nonprofit homeowners' association but where the

value of the property is included in the appraisals of property owned

by members of the association under G.S. 105-277.8.

e. Repealed by Session Laws 2008-35, s. 1.2, effective for taxes imposed

for taxable years beginning on or after July 1, 2008.


(a1) Late Application. – Upon a showing of good cause by the applicant for failure to

make a timely application, an application for exemption or exclusion filed after the close of the

listing period may be approved by the Department of Revenue, the board of equalization and

review, the board of county commissioners, or the governing body of a municipality, as

appropriate. An untimely application for exemption or exclusion approved under this subsection

applies only to property taxes levied by the county or municipality in the calendar year in which

the untimely application is filed.

(b) Approval and Appeal Process. – The Department of Revenue or the assessor to

whom an application for exemption or exclusion is submitted must review the application and

either approve or deny the application. Approved applications shall be filed and made available

to all taxing units in which the exempted or excluded property is situated. If the Department

denies an application for exemption or exclusion, it shall notify the taxpayer, who may appeal

the denial to the Property Tax Commission.

If an assessor denies an application for exemption or exclusion, the assessor must notify the

owner of the decision and the owner may appeal the decision to the board of equalization and

review or the board of county commissioners, as appropriate, and from the county board to the

Property Tax Commission. If the notice of denial covers property located within a municipality,

the assessor shall send a copy of the notice and a copy of the application to the governing body

of the municipality. The municipal governing body shall then advise the owner whether it will

adopt the decision of the county board or require the owner to file a separate appeal with the

municipal governing body. In the event the owner is required to appeal to the municipal

governing body and that body renders an adverse decision, the owner may appeal to the Property

Tax Commission. Nothing in this subsection shall prevent the governing body of a municipality

from denying an application which has been approved by the assessor or by the county board

provided the owner's rights to notice and hearing are not abridged. Applications handled

separately by a municipality shall be filed in the office of the person designated by the governing

body, or in the absence of such designation, in the office of the chief fiscal officer of the

municipality.

(c) Discovery of Property. – When an owner of property that may be eligible for

exemption or exclusion neither lists the property nor files an application for exemption or

exclusion, the assessor or the Department of Revenue, as appropriate, shall proceed to discover

the property. If, upon appeal, the owner demonstrates that the property meets the conditions for

exemption or exclusion, the body hearing the appeal may approve the exemption or exclusion.

Discovery of the property by the Department or the county shall automatically constitute a

discovery by any taxing unit in which the property has a taxable situs.

(d) Roster of Exempted and Excluded Property. – The assessor shall prepare and

maintain a roster of all property in the county that is granted tax relief through classification or

exemption. On or before November 1 of each year, the assessor must send a report to the

Department of Revenue summarizing the information contained in the roster. The report must be

in the format required by the Department. The assessor must also send the Department a copy of

the roster upon the request of the Department. As to affected real and personal property, the

roster shall set forth:

(1) The name of the owner of the property.

(2) A brief description of the property.

(3) A statement of the use to which the property is put.

(4) A statement of the value of the property.


(5) The total value of exempt property in the county and in each municipality

therein.

(e) Annual Review of Exempted or Excluded Property. – Pursuant to G.S. 105-296(l), the

assessor must annually review at least one-eighth of the parcels in the county exempted or

excluded from taxation to verify that the parcels qualify for the exemption or exclusion. (1973,

c. 695, s. 8; c. 1252; 1981, c. 54, ss. 2, 3; c. 86, s. 2; c. 915; 1985 (Reg. Sess., 1986), c. 982, s.

22; 1987, c. 45, s. 1; c. 295, ss. 5, 6; c. 680, ss. 1-3; c. 813, s. 13; 1989, c. 674, s. 2; c. 723, s. 2;

1991, c. 34, s. 1; 1991 (Reg. Sess., 1992), c. 975, s. 3; 1993, c. 459, s. 3; 1995, c. 41, s. 7; 1995

(Reg. Sess., 1996), c. 646, s. 16; 1997-23, s. 4; 2000-140, s. 72(b); 2001-139, s. 1; 2007-484, s.

43.7T(b); 2007-497, s. 2.4; 2008-35, s. 1.3; 2008-107, s. 28.11(g); 2008-171, ss. 3, 7(c);

2009-445, s. 23(a), (c)-(e); 2009-481, s. 3.)


Article 12A.

Taxation of Lessees and Users of Tax-Exempt Cropland or Forestland.

§ 105-282.7. Taxation of lessees and users of tax-exempt cropland or forestland.

(a) When any cropland or forestland owned by the United States, the State, a county or a

municipal corporation is leased, loaned or otherwise made available to and used by a person, as

defined in G.S. 105-273(12), in connection with a business conducted for profit, the lessee or

user of the property is subject to taxation to the same extent as if the lessee or user owned the

property. As used in this section, "forestland" has the same meaning as in G.S. 105-277.2(2), and

"cropland" means agricultural land and horticultural land as defined in G.S. 105-277.2(1) and (3)

respectively.

(b) This section does not apply to cropland or forestland for which payments in lieu of

taxes are made in amounts equivalent to the amount of tax that could otherwise be lawfully

assessed.

(c) Taxes levied pursuant to this Article are levied on the privilege of leasing or

otherwise using tax-exempt cropland or forestland in connection with a business conducted for

profit. The purpose of these taxes is to eliminate the competitive advantage accruing to

profit-making enterprises from the use of tax-exempt property. (1981, c. 819, s. 1.)

§ 105-282.8. Assessment and collection.

The taxes levied under this Article shall be assessed to the lessee or user of the exempt

property and shall be collected in the same manner and to the extent as if the lessee or user

owned the property. The taxes are a debt due from the lessee or user to the taxing unit in which

the property is located and are recoverable as other actions to collect a debt. (1981, c. 819, s. 1.)

Article 13.

Standards for Appraisal and Assessment.

§ 105-283. Uniform appraisal standards.

All property, real and personal, shall as far as practicable be appraised or valued at its true

value in money. When used in this Subchapter, the words "true value" shall be interpreted as


meaning market value, that is, the price estimated in terms of money at which the property would

change hands between a willing and financially able buyer and a willing seller, neither being

under any compulsion to buy or to sell and both having reasonable knowledge of all the uses to

which the property is adapted and for which it is capable of being used. For the purposes of this

section, the acquisition of an interest in land by an entity having the power of eminent domain

with respect to the interest acquired shall not be considered competent evidence of the true value

in money of comparable land. (1939, c. 310, s. 500; 1953, c. 970, s. 5; 1955, c. 1100, s. 2; 1959,

c. 682; 1967, c. 892, s. 7; 1969, c. 945, s. 1; 1971, c. 806, s. 1; 1973, c. 695, s. 11; 1977, 2nd

Sess., c. 1297.)

§ 105-284. Uniform assessment standard.

(a) Except as otherwise provided in this section, all property, real and personal, shall be

assessed for taxation at its true value or use value as determined under G.S. 105-283 or G.S. 105-

277.6, and taxes levied by all counties and municipalities shall be levied uniformly on

assessments determined in accordance with this section.

(b) The assessed value of public service company system property subject to appraisal by

the Department of Revenue under G.S. 105-335(b)(1) shall be determined by applying to the

allocation of such value to each county a percentage to be established by the Department of

Revenue. The percentage to be applied shall be either:

(1) The median ratio established in sales assessment ratio studies of real property

conducted by the Department of Revenue in the county in the year the county

conducts a reappraisal of real property and in the fourth and seventh years

thereafter; or

(2) A weighted average percentage based on the median ratio for real property

established by the Department of Revenue as provided in subdivision (1) and

a one hundred percent (100%) ratio for personal property. No percentage shall

be applied in a year in which the median ratio for real property is ninety

percent (90%) or greater.

If the median ratio for real property in any county is below ninety percent (90%) and if the

county assessor has provided information satisfactory to the Department of Revenue that the

county follows accepted guidelines and practices in the assessment of business personal

property, the weighted average percentage shall be applied to public service company property.

In calculating the weighted average percentage, the Department shall use the assessed value

figures for real and personal property reported by the county to the Local Government

Commission for the preceding year. In any county which fails to demonstrate that it follows

accepted guidelines and practices, the percentage to be applied shall be the median ratio for real

property. The percentage established in a year in which a sales assessment ratio study is

conducted shall continue to be applied until another study is conducted by the Department of

Revenue.

(c) Notice of the median ratio and the percentage to be applied for each county shall be

given by the Department of Revenue to the chairman of the board of commissioners not later

than April 15 of the year for which it is to be effective. Notice shall also be given at the same

time to the public service companies whose property values are subject to adjustment under this

section. Either the county or an affected public service company may challenge the real property

ratio or the percentage established by the Department of Revenue by giving notice of exception

within 30 days after the mailing of the Department's notice. Upon receipt of such notice of


exception, the Department shall arrange a conference with the challenging party or parties to

review the matter. Following the conference, the Department shall notify the challenging party or

parties of its final determination in the matter. Either party may appeal the Department's

determination to the Property Tax Commission by giving notice of appeal within 30 days after

the mailing of the Department's decision.

(d) Property that is in a development financing district and that is subject to an agreement

entered into pursuant to G.S. 159-108 shall be assessed at its true value or at the minimum value

set out in the agreement, whichever is greater.(1939, c. 310, s. 500; 1953, c. 970, s. 5; 1955, c.

1100, s. 2; 1959, c. 682; 1967, c. 892, s. 7; 1969, c. 945, s. 1; 1971, c. 806, s. 1; 1973, c. 695, s.

12; 1985, c. 601, s. 1; 1987 (Reg. Sess., 1988), c. 1052, s. 1; 2003-403, s. 20.)

Article 14.

Time for Listing and Appraising Property for Taxation.

§ 105-285. Date as of which property is to be listed and appraised.

(a) Annual Listing Required. – All property subject to ad valorem taxation shall be listed

annually.

(b) Personal Property; General Rule. – Except as otherwise provided in this Chapter, the

value, ownership, and place of taxation of personal property, both tangible and intangible, shall

be determined annually as of January 1.


(d) Real Property. – The value of real property shall be determined as of January 1 of the

years prescribed by G.S. 105-286 and G.S. 105-287. The ownership of real property shall be

determined annually as of January 1, except in the following situation: When any real property is

acquired after January 1, but prior to July 1, and the property was not subject to taxation on

January 1 on account of its exempt status, it shall be listed for taxation by the transferee as of the

date of acquisition and shall be appraised in accordance with its true value as of January 1

preceding the date of acquisition; and the property shall be taxed for the fiscal year of the taxing

unit beginning on July 1 of the year in which it is acquired. The person in whose name such

property is listed shall have the right to appeal the listing, appraisal, and assessment of the

property in the same manner as that provided for listings made as of January 1.

In the event real property exempt as of January 1 is, prior to July 1, acquired from a

governmental unit that by contract is making payments in lieu of taxes to the taxing unit for the

fiscal period beginning July 1 of the year in which the property is acquired, the tax on such

property for the fiscal period beginning on July 1 immediately following acquisition shall be one

half of the amount of the tax that would have been imposed if the property had been listed for

taxation as of January 1. (1939, c. 310, s. 302; 1945, c. 973; 1971, c. 806, s. 1; 1973, c. 735;

1985, c. 656, s. 21; 1987, c. 813, s. 12; 1993, c. 485, s. 17.)

§ 105-286. Time for general reappraisal of real property.

(a) Octennial Cycle. – Each county must reappraise all real property in accordance with

the provisions of G.S. 105-283 and G.S. 105-317 as of January 1 of the year set out in the

following schedule and every eighth year thereafter, unless the county is required to advance the

date under subdivision (2) of this section or chooses to advance the date under subdivision (3) of

this section.

(1) Schedule of Initial Reappraisals.


Division One – 1972: Avery, Camden, Cherokee, Cleveland, Cumberland,

Guilford, Harnett, Haywood, Lee, Montgomery, Northampton, and Robeson.

Division Two – 1973: Caldwell, Carteret, Columbus, Currituck, Davidson,

Gaston, Greene, Hyde, Lenoir, Madison, Orange, Pamlico, Pitt, Richmond,

Swain, Transylvania, and Washington.

Division Three – 1974: Ashe, Buncombe, Chowan, Franklin, Henderson,

Hoke, Jones, Pasquotank, Rowan, and Stokes.

Division Four – 1975: Alleghany, Bladen, Brunswick, Cabarrus, Catawba,

Dare, Halifax, Macon, New Hanover, Surry, Tyrrell, and Yadkin.

Division Five – 1976: Bertie, Caswell, Forsyth, Iredell, Jackson, Lincoln,

Onslow, Person, Perquimans, Rutherford, Union, Vance, Wake, Wilson, and

Yancey.

Division Six – 1977: Alamance, Durham, Edgecombe, Gates, Martin,

Mitchell, Nash, Polk, Randolph, Stanly, Warren, and Wilkes.

Division Seven – 1978: Alexander, Anson, Beaufort, Clay, Craven, Davie,

Duplin, and Granville.

Division Eight – 1979: Burke, Chatham, Graham, Hertford, Johnston,

McDowell, Mecklenburg, Moore, Pender, Rockingham, Sampson, Scotland,

Watauga, and Wayne.

(2) Mandatory Advancement. – A county whose population is 75,000 or greater

according to the most recent annual population estimates certified to the

Secretary by the State Budget Officer must conduct a reappraisal of real

property when the county's sales assessment ratio determined under G.S.

105-289(h) is less than .85 or greater than 1.15, as indicated on the notice the

county receives under G.S. 105-284. A reappraisal required under this

subdivision must become effective no later than January 1 of the earlier of the

following years:

a. The third year following the year the county received the notice.

b. The eighth year following the year of the county's last reappraisal.

(3) Optional Advancement. – A county may conduct a reappraisal of real property

earlier than required by subdivision (1) or (2) of this subsection if the board of

county commissioners adopts a resolution providing for advancement of the

reappraisal. The resolution must designate the effective date of the advanced

reappraisal and may designate a new reappraisal cycle that is more frequent

than the octennial cycle set in subdivision (1) of this subsection. The board of

county commissioners must promptly forward a copy of the resolution

adopted under this subdivision to the Department of Revenue. A more

frequent reappraisal cycle designated in a resolution adopted under this

subdivision continues in effect after a mandatory reappraisal required under

subdivision (2) of this subsection unless the board of county commissioners

adopts another resolution that designates a different date for the county's next

reappraisal.

(b), (c) Repealed by Session Laws 2008-146, s. 1.1, effective July 1, 2009. (1939, c. 310,

s. 300; 1941, c. 282, ss. 1, 11/2; 1943, c. 634, s. 1; 1945, c. 5; 1947, c. 50; 1949, c. 109; 1951, c.

847; 1953, c. 395; 1955, c. 1273; 1957, c. 1453, s. 1; 1959, c. 704, s. 1; 1971, c. 806, s. 1; 1973,

c. 476, s. 193; 1987, c. 45, s. 1; 2008-146, s. 1.1.)


§ 105-287. Changing appraised value of real property in years in which general

reappraisal is not made.

(a) In a year in which a general reappraisal of real property in the county is not made

under G.S. 105-286, the property shall be listed at the value assigned when last appraised unless

the value is changed in accordance with this section. The assessor shall increase or decrease the

appraised value of real property, as determined under G.S. 105-286, to recognize a change in the

property's value resulting from one or more of the following reasons:

(1) Correct a clerical or mathematical error.

(2) Correct an appraisal error resulting from a misapplication of the schedules,

standards, and rules used in the county's most recent general reappraisal.

(2a) Recognize an increase or decrease in the value of the property resulting from a

conservation or preservation agreement subject to Article 4 of Chapter 121 of

the General Statutes, the Conservation and Historic Preservation Agreements

Act.

(2b) Recognize an increase or decrease in the value of the property resulting from a

physical change to the land or to the improvements on the land, other than a

change listed in subsection (b) of this section.

(2c) Recognize an increase or decrease in the value of the property resulting from a

change in the legally permitted use of the property.

(3) Recognize an increase or decrease in the value of the property resulting from a

factor other than one listed in subsection (b).

(b) In a year in which a general reappraisal of real property in the county is not made, the

assessor may not increase or decrease the appraised value of real property, as determined under

G.S. 105-286, to recognize a change in value caused by:

(1) Normal, physical depreciation of improvements;

(2) Inflation, deflation, or other economic changes affecting the county in general;

or

(3) Betterments to the property made by:

a. Repainting buildings or other structures;

b. Terracing or other methods of soil conservation;

c. Landscape gardening;

d. Protecting forests against fire; or

e. Impounding water on marshland for non-commercial purposes to

preserve or enhance the natural habitat of wildlife.

(c) An increase or decrease in the appraised value of real property authorized by this

section shall be made in accordance with the schedules, standards, and rules used in the county's

most recent general reappraisal. An increase or decrease in appraised value made under this

section is effective as of January 1 of the year in which it is made and is not retroactive. The

reason for an increase or decrease in appraised value made under this section need not be under

the control of or at the request of the owner of the affected property. This section does not

modify or restrict the provisions of G.S. 105-312 concerning the appraisal of discovered

property.

(d) Notwithstanding subsection (a), if a tract of land has been subdivided into lots and

more than five acres of the tract remain unsold by the owner of the tract, the assessor may

appraise the unsold portion as land acreage rather than as lots. A tract is considered subdivided


into lots when the lots are located on streets laid out and open for travel and the lots have been

sold or offered for sale as lots since the last appraisal of the property. (1939, c. 310, ss. 301, 500;

1953, c. 970, s. 5; 1955, c. 901; c. 1100, s. 2; 1959, c. 682; c. 704, s. 2; 1963, c. 414; 1967, c.

892, s. 7; 1969, c. 945, s. 1; 1971, c. 806, s. 1; 1973, c. 695, s. 10; c. 790, s. 2; 1987, c. 655;

1997-226, s. 4; 2001-139, s. 2; 2008-146, s. 1.2.)

Article 15.

Duties of Department and Property Tax Commission as to Assessments.

§ 105-288. Property Tax Commission.

(a) Creation and Membership. – The Property Tax Commission is created. It consists of

five members, three of whom are appointed by the Governor and two of whom are appointed by

the General Assembly. Of the two appointments by the General Assembly, one shall be made

upon the recommendation of the Speaker of the House of Representatives and the other shall be

made upon the recommendation of the President Pro Tempore of the Senate. The terms of the

members are for four years and expire on June 30. The General Assembly shall make its

appointments in accordance with G.S. 120-121 and shall fill a vacancy in accordance with G.S.

120-122. A vacancy occurs on the Commission when a member resigns, is removed, or dies. The

person appointed to fill a vacancy shall serve for the balance of the unexpired term. The

Governor may remove any member for misfeasance, malfeasance, or nonfeasance.

The Commission shall have a chair and a vice-chair. The Governor shall designate one of the

Commission members as the chair, to serve at the pleasure of the Governor. The members of the

Commission shall elect a vice-chair from among its membership. The vice-chair serves until the

member's regularly appointed term expires.

(b) Duties. – The Property Tax Commission constitutes the State Board of Equalization

and Review for the valuation and taxation of property in the State. It shall hear appeals from the

appraisal and assessment of the property of public service companies as defined in G.S. 105-333.

The Commission may adopt rules needed to fulfill its duties.

(c) Oath. – Each member of the Property Tax Commission, as the appointed holder of an

office, shall take the oath required by Article VI, § 7 of the North Carolina Constitution with the

following phrase added to it: "that I will not allow my actions as a member of the Property Tax

Commission to be influenced by personal or political friendships or obligations,".

(d) Expenses. – The members of the Property Tax Commission shall receive travel and

subsistence expenses in accordance with G.S. 138-5 and a salary as provided for by the

Commission when hearing cases, meeting to decide cases, and attending training or continuing

education classes on property taxes or judicial procedure. The Secretary of Revenue shall supply

all the clerical and other services required by the Commission. All expenses of the Commission

and the Department of Revenue in performing the duties enumerated in this Article shall be paid

as provided in G.S. 105-501.

(e) Meetings. – The Property Tax Commission shall meet at least once in each quarter

and may hold special meetings at any time and place within the State at the call of the Chair or

upon the written request of at least three members. At least 15 days' notice shall be given to each

member with respect to each special meeting. A majority of the Commission members

constitutes a quorum for the transaction of business. (1939, c. 310, ss. 200, 201; 1941, c. 327, s.

6; 1947, c. 184; 1961, c. 547, s. 1; 1967, c. 1196, ss. 1, 2; 1971, c. 806, s. 1; 1973, c. 476, s. 193;


1991, c. 110, s. 1; 1991 (Reg. Sess., 1992), c. 1007, s. 20; c. 1016, s. 2; 1995, c. 41, s. 5;

2000-67, s. 7.11; 2005-276, s. 22.5(a); 2007-308, s. 1.)

§ 105-289. Duties of Department of Revenue.

(a) It is the duty of the Department of Revenue:

(1) To discharge the duties prescribed by law and to enforce the provisions of this

Subchapter.

(2) To exercise general and specific supervision over the valuation and taxation of

property by taxing units throughout the State.

(3) To appraise the property of public service companies.

(4) To keep full and accurate records of the Commission's official proceedings.

(5) To prepare and distribute annually to each assessor the manual developed by

the Use-Value Advisory Board under G.S. 105-277.7 that establishes the cash

rental rates for agricultural lands and horticultural lands and the net income

ranges for forestland.

(6) To establish requirements for horticultural land, used to produce evergreens

intended for use as Christmas trees, in lieu of a gross income requirement until

evergreens are harvested from the land, and to establish a gross income

requirement for this type horticultural land, that differs from the income

requirement for other horticultural land, when evergreens are harvested from

the land.

(7) To conduct studies of the cash rents for agricultural and horticultural lands on

a county or a regional basis, such as the Major Land Resource Area map

designated and developed by the U.S. Department of Agriculture. The results

of the studies must be furnished to the North Carolina Use-Value Advisory

Board. The studies may be conducted on any reasonable basis and timetable

that will be reflective of rents and values for each local area based on the

productivity of the land.

(b), (c) Repealed by Session Laws 1973, c. 476, s. 193.

(d) In exercising general and specific supervision over the valuation and taxation of

property, the Department shall provide the following:

(1) A continuing program of education and training for local tax officials in the

conduct of their duties;

(2) A program for testing the qualifications of an assessor and other persons

engaged in the appraisal of property for a county or municipality;

(3) A certification program for an assessor and other persons engaged in the

appraisal of property for a county or municipality; and

(4) Assistance to the county and/or the county attorney in developing the

specifications for the proposed contract sent to the Department for review

pursuant to G.S. 105-299.

The Department shall promulgate regulations to carry out its duties under this subsection.

(e) The Department of Revenue may furnish the following information to a local tax

official:

(1) Information contained in a report to it or to any other State department; and

(2) Information the Department has in its possession that may assist a local tax

official in securing complete tax listings, appraising or assessing taxable


property, collecting taxes, or presenting information in administrative or

judicial proceedings involving the listing, appraisal, or assessment of property.

A local tax official may use information obtained from the Department under this subsection

only for the purposes stated in subdivision (2). A local tax official may not divulge or make

public this information except as required in administrative or judicial proceedings under this

Subchapter. A local tax official who makes improper use of or discloses information obtained

from the Department under this subsection is punishable as provided in G.S. 153A-148.1 or G.S.

160A-208.1, as appropriate.

The Department may not furnish information to a local tax official pursuant to this subsection

unless it has obtained a written certification from the official stating that the official is familiar

with the provisions of this subsection and G.S. 153A-148.1 or G.S. 160A-208.1, as appropriate,

and that information obtained from the Department under this subsection will be used only for

the purposes stated in subdivision (2).

(f) To advise local tax officials of their duties concerning the listing, appraisal, and

assessment of property and the levy and collection of property taxes.

(g) To see that proper proceedings are brought to enforce the statutes pertaining to

taxation and the collection of penalties and liabilities imposed by law upon public officers,

officers of corporations, and individuals who fail, refuse, or neglect to comply with the

provisions of this Subchapter and other laws with respect to the taxation of property, and to call

upon the Attorney General of this State or any prosecuting attorney of this State to assist in the

execution of the powers conferred by the laws of this State with respect to the taxation of

property.

(h) To make annual studies of the ratio of the appraised value of real property to its true

value and to establish for each county the median ratio as determined by the studies for each

calendar year. The studies for each calendar year shall be completed by April 15 of the following

calendar year. The studies shall be conducted in accordance with generally accepted principles

and procedures for sales assessment ratio studies.

(i) To maintain a register of appraisal firms, mapping firms and other persons or firms

having expertise in one or more of the duties of the assessor; to review the qualifications and

work of such persons or firms; and to advise county officials as to the professional and financial

capabilities of such persons or firms to assist the assessor in carrying out his duties under this

Subchapter. The register shall include a copy of the report filed by the counties pursuant to G.S.

105-322(g)(4). It shall also include the average median sales assessment ratio and the coefficient

of dispersion achieved in each county for the first two years following the county's effective date

of revaluation. To be registered with the Department of Revenue, such persons or firms shall

annually file a report with the Department setting forth the following information:

(1) A statement of the firm's ownership,

(2) A statement of the firm's financial condition,

(3) A list of the firm's principal officers with a statement of their qualifications

and experience,

(4) A list of the firm's employees with a statement of their education, training and

experience, and

(5) A full and complete resume of each employee which the firm proposes to

place in a supervisory position in any mapping or revaluation project for a

county in this State. (1939, c. 310, s. 202; 1955, c. 1350, s. 10; 1967, c. 1196,

s. 3; 1969, c. 7, s. 1; 1971, c. 806, s. 1; 1973, c. 47, s. 2; c. 476, s. 193; 1975,


c. 275, s. 9; c. 508, s. 1; 1981, c. 387, ss. 1, 2; 1983, c. 813, s. 1; 1985, c. 601,

s. 3; c. 628, s. 3; 1987, c. 45, s. 1; c. 46, s. 1; c. 440, s. 1; c. 830, s. 84(a); 1987

(Reg. Sess., 1988), c. 1052, s. 1; 1989, c. 79, ss. 2, 4; c. 736, s. 3; 1991, c. 110,

s. 2; 1993, c. 485, s. 35; 2002-184, s. 5; 2005-313, s. 6.)


§ 105-290. Appeals to Property Tax Commission.

(a) Duty to Hear Appeals. – In its capacity as the State board of equalization and review,

the Property Tax Commission shall hear and adjudicate appeals from boards of county

commissioners and from county boards of equalization and review as provided in this section.

(b) Appeals from Appraisal and Listing Decisions. – The Property Tax Commission shall

hear and decide appeals from decisions concerning the listing, appraisal, or assessment of

property made by county boards of equalization and review and boards of county commissioners.

Any property owner of the county may except to an order of the county board of equalization

and review or the board of county commissioners concerning the listing, appraisal, or assessment

of property and appeal the order to the Property Tax Commission.

(1) In these cases, taxpayers and persons having ownership interests in the

property subject to taxation may file separate appeals or joint appeals at the

election of one or more of the taxpayers. It is the intent of this provision that

all owners of a single item of personal property or tract or parcel of real

property be allowed to join in one appeal and also that any taxpayer be

allowed to include in one appeal all objections timely presented regardless of

the fact that the listing or valuation of more than one item of personal property

or tract or parcel of real property is the subject of the appeal.

(2) When an appeal is filed, the Property Tax Commission shall provide a hearing

before representatives of the Commission or the full Commission as specified

in this subdivision.

a. Hearing by Commission Representatives. – The Commission may

authorize one or more members of the Commission or employees of

the Department of Revenue to hear an appeal, to make examinations

and investigations, to have made from stenographic notes a full and

complete record of the evidence offered at the hearing, and to make

recommended findings of fact and conclusions of law. Should the

Commission elect to follow this procedure, it shall fix the time and

place at which its representatives will hear the appeal and, at least 10

days before the hearing, give written notice of the hearing to the

appellant and to the clerk of the board of commissioners of the county

from which the appeal is taken. At the hearing the Commission's

representatives shall hear all evidence and affidavits offered by the

appellant and appellee county and may exercise the authority granted

by subsection (d), below, to obtain information pertinent to decision of

the appeal. The representatives conducting the hearing shall submit to

the Commission and to the appellant and appellee their recommended

findings of fact and conclusions of law. Upon the request of any party,

the representatives conducting the hearing shall also submit to the


Commission and to the appellant and appellee a full record of the

proceeding. The cost of providing the full record of the proceeding

shall be borne by the party requesting it, unless the Commission

determines for good cause that the cost should be borne by the

Commission. The Commission shall review the record, the

recommended findings of fact and conclusions of law, and any written

arguments that may be submitted to the Commission by the appellant

or appellee within 15 days following the date on which the findings

and conclusions were submitted to the parties and shall take one of the

following actions:

1. Accept the recommended findings of fact and conclusions of

law and issue an appropriate order as provided in subdivision

(b)(3), below.

2. Make new findings of fact or conclusions of law based upon

the materials submitted by the Commission's representatives

and issue an appropriate order as provided in subdivision

(b)(3), below.

3. Rehear the appeal under the procedure provided in subdivision

(b)(2)b, below, with respect to any portion of the record or

recommended findings of fact or conclusions of law.

b. Hearing by Full Commission. – Should the Commission elect not to

employ the procedure provided in subdivision (b)(2)a, above, it shall

fix a time and place at which the Commission shall hear the appeal

and, at least 10 days before the hearing, give written notice of the

hearing to the appellant and to the clerk of the board of commissioners

of the county from which the appeal is taken. At the hearing the

Commission shall hear all evidence and affidavits offered by the

appellant and appellee county and may exercise the authority granted

by subsection (d), below, to obtain information pertinent to decision of

the appeal. The Commission shall make findings of fact and

conclusions of law and issue an appropriate order as provided in

subdivision (b)(3), below.

(3) On the basis of the findings of fact and conclusions of law made after any

hearing provided for by this subsection (b), the Property Tax Commission

shall enter an order (incorporating the findings and conclusions) reducing,

increasing, or confirming the valuation or valuations appealed or listing or

removing from the tax lists the property whose listing has been appealed. A

certified copy of the order shall be delivered to the appellant and to the clerk

of the board of commissioners of the county from which the appeal was taken,

and the abstracts and tax records of the county shall be corrected to reflect the

Commission's order.

(4) Interest on Overpayments. – When an order of the Property Tax Commission

reduces the valuation of property or removes the property from the tax lists

and, based on the order, the taxpayer has paid more tax than is due on the

property, the taxpayer is entitled to receive interest on the overpayment in

accordance with this subdivision. An overpayment of tax bears interest at the


rate set under G.S. 105-241.21 from the date the interest begins to accrue until

a refund is paid. Interest accrues from the later of the date the tax was paid

and the date the tax would have been considered delinquent under G.S.

105-360. A refund is considered paid on a date determined by the governing

body of the taxing unit that is no sooner than five days after a refund check is

mailed.

(c) Appeals from Adoption of Schedules, Standards, and Rules. – It shall be the duty of

the Property Tax Commission to hear and to adjudicate appeals from orders of boards of county

commissioners adopting schedules of values, standards, and rules under the provisions of G.S.

105-317 as prescribed in this subsection (c), and the adoption of such schedules, standards, and

rules shall not be subject to appeal under any other provision of this Subchapter.

(1) A property owner of the county who, either separately or in conjunction with

other property owners of the county, asserts that the schedules of values,

standards, and rules adopted by order of the board of county commissioners

do not meet the true value or present-use value appraisal standards established

by G.S. 105-283 and G.S. 105-277.2(5), respectively, may appeal the order to

the Property Tax Commission within 30 days of the date when the order

adopting the schedules, standards, and rules was first published, as required by

G.S. 105-317(c).

(2) Upon such an appeal the Property Tax Commission shall proceed to hear the

appeal in accordance with the procedures provided in subdivisions (b)(1) and

(b)(2), above, and in scheduling the hearing upon such an appeal, the

Commission shall give it priority over appeals that may be pending before the

Commission under the provisions of subsection (b), above. The decision of

the Commission upon such an appeal shall be embodied in an order as

provided in subdivision (c)(3), below.

(3) On the basis of the findings of fact and conclusions of law made after any

hearing provided for by this subsection (c), the Property Tax Commission

shall enter an order (incorporating the findings and conclusions):

a. Modifying or confirming the order adopting the schedules, standards,

and rules challenged, or

b. Requiring the board of county commissioners to revise or modify its

order of adoption in accordance with the instructions of the

Commission and to present the order as thus revised or modified for

approval by the Commission under rules and regulations prescribed by

the Commission.

(d) Witnesses and Documents. – Upon its own motion or upon the request of any party to

an appeal, the Property Tax Commission, or any member of the Commission, or any employee of

the Department of Revenue so authorized by the Commission shall examine witnesses under

oath administered by any member of the Commission or any employee of the Department so

authorized by the Commission, and examine the documents of any person if there is ground for

believing that information contained in such documents is pertinent to the decision of any appeal

pending before the Commission, regardless of whether such person is a party to the proceeding

before the Commission. Witnesses and documents examined under the authority of this

subsection (d) shall be examined only after service of a subpoena as provided in subdivision


(d)(1), below. The travel expenses of any witness subpoenaed and the cost of serving any

subpoena shall be borne by the party that requested the subpoena.

(1) The Property Tax Commission, a member of the Commission, or any

employee of the Department of Revenue authorized by the Commission, is

authorized and empowered to subpoena witnesses and to subpoena documents

upon a subpoena to be signed by the chairman of the Commission directed to

the witness or witnesses or to the person or persons having custody of the

documents sought. Subpoenas issued under this subdivision may be served by

any officer authorized to serve subpoenas.

(2) Any person who shall willfully fail or refuse to appear, to produce subpoenaed

documents in response to a subpoena, or to testify as provided in this

subsection (d) shall be guilty of a Class 1 misdemeanor.

(3) Upon a motion, the Property Tax Commission, or a member of the

Commission may quash a subpoena if, after a hearing, the Commission finds

any of the following:

a. The subpoena requires the production of evidence that does not relate

to a matter in issue.

b. The subpoena fails to describe with sufficient particularity the

evidence required to be produced.

c. The subpoena is subject to being quashed for any other reason

sufficient in law.

(d1) Hearing on Motion to Quash Subpoena; Appeal. – A hearing on a motion to quash a

subpoena pursuant to subdivision (d)(3) of this section shall be heard at least 10 days prior to the

hearing for which the subpoena was issued. The denial of a motion to quash a subpoena is

subject to immediate judicial review in the Superior Court of Wake County or in the superior

court of the county where the person subject to the subpoena resides.

(d2) Business Entity Representation. – If a property owner is a business entity, the

business entity may represent itself using a nonattorney representative who is one or more of the

following of the business entity: (i) officer, (ii) manager or member-manager, if the business

entity is a limited liability company, (iii) employee whose income is reported on IRS Form W-2,

if the business entity authorizes the representation in writing, or (iv) owner of the business entity,

if the business entity authorizes the representation in writing and if the owner's interest in the

business entity is at least twenty-five percent (25%). Authority for and prior notice of

nonattorney representation shall be made in writing, under penalty of perjury, to the Commission

on a form provided by the Commission.

(e) Time Limits for Appeals. – A notice of appeal from an order of a board of county

commissioners, other than an order adopting a uniform schedule of values, or from a board of

equalization and review shall be filed with the Property Tax Commission within 30 days after the

date the board mailed a notice of its decision to the property owner. A notice of appeal from an

order adopting a schedule of values shall be filed within the time set in subsection (c).

(f) Notice of Appeal. – A notice of appeal filed with the Property Tax Commission shall

be in writing and shall state the grounds for the appeal. A property owner who files a notice of

appeal shall send a copy of the notice to the appropriate county assessor.

(g) What Constitutes Filing. – A notice of appeal submitted to the Property Tax

Commission by a means other than United States mail is considered to be filed on the date it is

received in the office of the Commission. A notice of appeal submitted to the Property Tax


Commission by United States mail is considered to be filed on the date shown on the postmark

stamped by the United States Postal Service. If an appeal submitted by United States mail is not

postmarked or the postmark does not show the date of mailing, the appeal is considered to be

filed on the date it is received in the office of the Commission. A property owner who files an

appeal with the Commission has the burden of proving that the appeal is timely. (1939, c. 310,

ss. 202, 1107, 1109; 1955, c. 1350, s. 10; 1967, c. 1196, s. 3; 1969, c. 7, ss. 1, 2; 1971, c. 806, s.

1; 1973, c. 476, s. 193; 1987, c. 295, ss. 3, 9; c. 680, ss. 4, 5; 1989 (Reg. Sess., 1990), c. 1005, ss.

1, 2; 1991 (Reg. Sess., 1992), c. 1016, s. 1; 1993, c. 539, s. 713; 1994, Ex. Sess., c. 24, s. 14(c);

1997-205, s. 1; 2007-251, ss. 3, 4; 2007-491, s. 44(1)a; 2014-120, s. 7(b).)

§ 105-291. Powers of Department and Commission.

(a) General Powers. – The Department of Revenue is authorized to exercise all powers

reasonably necessary to perform the duties imposed upon it by this Subchapter and other laws of

this State.

(b) Rule-Making Power. – The Department may adopt such rules and regulations, not

inconsistent with law, as the Department may deem necessary to perform the duties or

responsibilities of this Chapter.

(c) General Investigatory Authority. – In exercising general and specific supervision over

the valuation and taxation of property, the Department or any authorized deputy shall have

power to examine witnesses under oath administered by any member or authorized deputy and to

examine the documents of any State department, county, city, town, or taxpayer if there is

ground for believing that the witnesses have or that the documents contain information pertinent

to the subject of the Department's inquiry. Witnesses and documents examined under the

authority of this subsection (c) may be obtained through service of subpoenas as provided in

subdivision (c)(1), below.

(1) To obtain the testimony of witnesses or to obtain access to the documents

enumerated in this subsection (c), the Department or any authorized deputy is

authorized and empowered to subpoena witnesses and to subpoena documents

upon a subpoena to be signed by the Secretary of Revenue directed to the

witness or to the person having custody of the documents sought, and to be

served by any officer authorized to serve subpoenas.

(2) Any person who shall willfully fail or refuse to appear; to produce subpoenaed

documents before the Department or authorized deputy in response to a

subpoena; or to testify as provided in this subsection (c) shall be guilty of a

Class 1 misdemeanor.

(d) Certification of Actions. – The Property Tax Commission shall have power to certify

copies of its records, orders, and proceedings by attesting the copies with its official seal, and

copies of records, orders, or proceedings so certified shall be received in evidence in all courts of

this State with like effect as certified copies of other public records.

(e) Power to Require Reports. – In its discretion, the Department may require tax

supervisors, clerks of boards of county commissioners, and county accountants to file with it,

when called for, complete reports of the appraised and assessed value of all real and personal

property in the counties, itemized as the Department may prescribe.

(f) Power to Prescribe Record Forms. – The Department may prescribe the forms, books,

and records to be used in the listing, appraisal, and assessment of property and in the levying and

collection of property taxes, and how the same shall be kept.


(g) Power to Recommend Appraisal Standards. – The Department may develop and

recommend standards and rules to be used by tax supervisors and other responsible officials in

the appraisal of specific kinds and categories of property for taxation. (1939, c. 310, s. 203; 1945,

c. 955; 1951, c. 798; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1993, c. 539, s. 714; 1994, Ex. Sess.,

c. 24, s. 14(c).)


Article 16.

County Listing, Appraisal, and Assessing Officials.

§ 105-294. County assessor.

(a) Appointment. – Persons occupying the position of county assessor on July 1, 1983,

shall continue in office until the first Monday in July, 1983. At its first regular meeting in July,

1983, and every two years or four years thereafter, as appropriate, the board of county

commissioners of each county shall appoint a county assessor to serve a term of not less than two

nor more than four years; provided, however, that no person shall be eligible for initial

appointment to a term of more than two years unless such person is deemed to be qualified as

provided in subsection (b) of this section or has been certified by the Department of Revenue as

provided in subsection (c) of this section. The board of commissioners may remove the assessor

from office during his term for good cause after giving him notice in writing and an opportunity

to appear and be heard at a public session of the board. Whenever a vacancy occurs in this office,

the board of county commissioners shall appoint a qualified person to serve as county assessor

for the period of the unexpired term.

(b) Persons who held the position of assessor on July 1, 1971, and continue to hold the

position, and persons who have been certified for appointment as assessor by the Department of

Revenue between July 1, 1971, and July 1, 1983, are deemed to be qualified to serve as county

assessor. Any other person selected to serve as county assessor must meet the following

requirements:

(1) Be at least 21 years of age as of the date of appointment;

(2) Hold a high school diploma or certificate of equivalency, or in the alternative,

have five years employment experience in a vocation which is reasonably

related to the duties of a county assessor;

(3) Within two years of the date of appointment, achieve a passing score in

courses of instruction approved by the Department of Revenue covering the

following topics:

a. The laws of North Carolina governing the listing, appraisal, and

assessment of property for taxation;

b. The theory and practice of estimating the fair market value of real

property for ad valorem tax purposes;

c. The theory and practice of estimating the fair market value of personal

property for ad valorem tax purposes; and

d. Property assessment administration.

(4) Upon completion of the required four courses, achieve a passing grade in a

comprehensive examination in property tax administration conducted by the

Department of Revenue.


(c) Certification. – Persons meeting all of the requirements of this section shall be

certified by the Department of Revenue. From the date of appointment until the date of

certification, persons appointed to serve as county assessor are deemed to be serving in an acting

capacity. Any person who fails to qualify within two years after the date of initial appointment

shall not be eligible for reappointment until all of the requirements have been met.

(d) In order to retain the position of county assessor, every person serving as county

assessor, including those persons deemed to be qualified under the provisions of this act, shall, in

each period of 24 months, attend at least 30 hours of instruction in the appraisal or assessment of

property as provided in regulations of the Department of Revenue.

(e) The compensation and expenses of the county assessor shall be determined by the

board of county commissioners.

(f) Alternative to separate office of county assessor. – Pursuant to Act [Article] VI,

Section 9 of the North Carolina Constitution, the office of county assessor is hereby declared to

be an office that may be held concurrently with any other appointive or elective office except

that of member of the board of county commissioners. (1939, c. 310, ss. 400, 401; 1953, c. 970,

ss. 1, 2; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1983, c. 813, s. 2; 1987, c. 45, ss. 1, 2; 1997-23,

s. 5.)

§ 105-295. Oath of office for assessor.

The assessor, as the holder of an appointed office, shall take the oath required by Article VI,

§ 7 of the North Carolina Constitution with the following phrase added to it: "that I will not

allow my actions as assessor to be influenced by personal or political friendships or

obligations,". The oath must be filed with the clerk of the board of county commissioners. (1939,

c. 310, s. 402; 1971, c. 806, s. 1; 1987, c. 45, s. 1; 1991, c. 110, s. 4; 1991 (Reg. Sess., 1992), c.

1007, s. 21.)

§ 105-296. Powers and duties of assessor.

(a) The county assessor shall have general charge of the listing, appraisal, and assessment

of all property in the county in accordance with the provisions of law. He shall perform the

duties imposed upon him by law, and he shall have and exercise all powers reasonably necessary

in the performance of his duties not inconsistent with the Constitution or the laws of this State.

(b) Within budgeted appropriations, he shall employ listers, appraisers, and clerical

assistants necessary to carry out the listing, appraisal, assessing, and billing functions required by

law. The assessor may allocate responsibility among such employees by territory, by subject

matter, or on any other reasonable basis. Each person employed by the assessor as a real property

appraiser or personal property appraiser shall during the first year of employment and at least

every other year thereafter attend a course of instruction in his area of work. At the end of the

first year of their employment, such persons shall also achieve a passing score on a

comprehensive examination in property tax administration conducted by the Department of

Revenue.

(c) At least 10 days before the date as of which property is to be listed, the assessor shall

advertise in a newspaper having general circulation in the county and post in at least five public

places in each township in the county a notice containing all of the items listed in this subsection.

If the listing period is extended in any county by the board of county commissioners, the assessor

shall advertise in the newspaper in which the original notice was published and post in the same

places a notice of the extension and of the times during which and the place or places at which


lists will be accepted during the extended period. The items that must be included in the notice

are:

(1) The date as of which property is to be listed.

(2) The date on which listing will begin.

(3) The date on which listing will end.

(4) The times between the date mentioned in subdivision (c)(2), above, and the

date mentioned in subdivision (c)(3), above, during which lists will be

accepted.

(5) The place or places at which lists will be accepted at the times established

under subdivision (c)(4), above.

(6) A statement that all persons who, on the date as of which property is to be

listed, own property subject to taxation must list such property within the

period set forth in the notice and that any person who fails to do so will be

subject to the penalties prescribed by law.

(7) If the county has provided for electronic listing of personal property under

G.S. 105-310.1, a statement that the county allows electronic listing of

personal property and the timetable and procedures for electronic listing.

(d) through (f) Repealed by Session Laws 1987, c. 43, s. 2.

(g) He shall have power to subpoena any person for examination under oath and to

subpoena documents whenever he has reasonable grounds for the belief that such person has

knowledge or that such documents contain information that is pertinent to the discovery or

valuation of any property subject to taxation in the county or that is necessary for compliance

with the requirements as to what the tax list shall contain. The subpoena shall be signed by the

chairman of the board of equalization and review if that board is in session; otherwise, it shall be

signed by the chairman of the board of county commissioners. It shall be served by an officer

qualified to serve subpoenas. Any person who shall wilfully fail or refuse to appear, produce

subpoenaed documents, or testify concerning the subject of the inquiry shall be guilty of a Class

1 misdemeanor.

(h) Only after the abstract has been carefully reviewed can the assessor require any

person operating a business enterprise in the county to submit a detailed inventory, statement of

assets and liabilities, or other similar information pertinent to the discovery or appraisal of

property taxable in the county. Inventories, statements of assets and liabilities, or other

information secured by the assessor under the terms of this subsection, but not expressly required

by this Subchapter to be shown on the abstract itself, shall not be open to public inspection but

shall be made available, upon request, to representatives of the Department of Revenue or of the

Division of Employment Security (DES) of the Department of Commerce. Any assessor or other

official or employee disclosing information so obtained, except as may be necessary in listing or

appraising property in the performance of official duties, or in the administrative or judicial

proceedings relating to listing, appraising, or other official duties, shall be guilty of a Class 3

misdemeanor and punishable only by a fine not exceeding fifty dollars ($50.00).

(i) Prior to the first meeting of the board of equalization and review, the assessor may,

for good cause, change the appraisal of any property subject to assessment for the current year.

Written notice of a change in assessment shall be given to the taxpayer at his last known address

prior to the first meeting of the board of equalization and review.

(j) The assessor must annually review at least one eighth of the parcels in the county

classified for taxation at present-use value to verify that these parcels qualify for the


classification. By this method, the assessor must review the eligibility of all parcels classified for

taxation at present-use value in an eight-year period. The period of the review process is based

on the average of the preceding three years' data. The assessor may request assistance from the

Farm Service Agency, the Cooperative Extension Service, the North Carolina Forest Service of

the Department of Agriculture and Consumer Services, or other similar organizations.

The assessor may require the owner of classified property to submit any information,

including sound management plans for forestland, needed by the assessor to verify that the

property continues to qualify for present-use value taxation. The owner has 60 days from the date

a written request for the information is made to submit the information to the assessor. If the

assessor determines the owner failed to make the information requested available in the time

required without good cause, the property loses its present-use value classification and the

property's deferred taxes become due and payable as provided in G.S. 105-277.4(c). If the

property loses its present-use value classification for failure to provide the requested information,

the assessor must reinstate the property's present-use value classification when the owner

submits the requested information within 60 days after the disqualification unless the information

discloses that the property no longer qualifies for present-use value classification. When a

property's present-use value classification is reinstated, it is reinstated retroactive to the date the

classification was revoked and any deferred taxes that were paid as a result of the revocation

must be refunded to the property owner. The owner may appeal the final decision of the assessor

to the county board of equalization and review as provided in G.S. 105-277.4(b1).

In determining whether property is operating under a sound management program, the

assessor must consider any weather conditions or other acts of nature that prevent the growing or

harvesting of crops or the realization of income from cattle, swine, or poultry operations. The

assessor must also allow the property owner to submit additional information before making this

determination.

(k) He shall furnish information to the Department of Revenue as required by the

Department to conduct studies in accordance with G.S. 105-289(h).

(l) The assessor shall annually review at least one-eighth of the parcels in the county

exempted or excluded from taxation to verify that these parcels qualify for the exemption or

exclusion. By this method, the assessor shall review the eligibility of all parcels exempted or

excluded from taxation in an eight-year period. The assessor may require the owner of exempt or

excluded property to make available for inspection any information reasonably needed by the

assessor to verify that the property continues to qualify for the exemption or exclusion. The

owner has 60 days from the date a written request for the information is made to submit the

information to the assessor. If the assessor determines that the owner failed to make the

information requested available in the time required without good cause, then the property loses

its exemption or exclusion. If the property loses its exemption or exclusion for failure to provide

the requested information, the assessor must reinstate the property's exemption or exclusion

when the owner makes the requested information available within 60 days after the

disqualification unless the information discloses that the property is no longer eligible for the

exemption or exclusion.

(m) The assessor shall annually review the transportation corridor official maps and

amendments to them filed with the register of deeds pursuant to Article 2E of Chapter 136 of the

General Statutes. The assessor must indicate on all tax maps maintained by the county or city

that portion of the properties embraced within a transportation corridor and must note any

variance granted for the property for such period as the designation remains in effect. The


assessor must tax the property within a transportation corridor as required under G.S. 105-277.9

and G.S. 105-277.9A. (1939, c. 310, ss. 403, 404; 1953, c. 970, s. 3; 1955, c. 1012, s. 1; 1957, c.

202; 1959, c. 740, s. 3; 1963, c. 302; 1971, c. 806, s. 1; 1973, c. 560; 1983, c. 813, s. 3; 1985, c.

518, s. 2; 1987, c. 43, s. 2; c. 45, ss. 1, 2; c. 830, s. 84(b); 1987 (Reg. Sess., 1988), c. 1044, s. 13;

1991, c. 34, s. 2; c. 77, s. 1; 1993, c. 539, ss. 715, 716; 1994, Ex. Sess., c. 24, s. 14(c); 2001-139,

ss. 3-5; 2002-184, s. 6; 2005-313, s. 7; 2005-386, s. 1.4; 2011-145, s. 13.25(pp); 2011-238, s. 2;

2011-401, s. 5.1; 2013-155, s. 8; 2014-3, s. 14.19.)

§ 105-297. Assistant assessor.

The board of county commissioners may, upon the recommendation of the assessor, appoint

one or more assistant assessors. The board may delegate to assistant assessors appointed under

this section responsibility for the appraisal of real property, the listing and appraisal of business

property, or such other duties as the board deems advisable. Pursuant to Article VI, Sec. 9, of the

North Carolina Constitution, the office of assistant assessor is hereby declared to be an office

that may be held concurrently with any other appointive office. (1939, c. 310, s. 409; 1955, c.

866; 1963, c. 625; 1967, cc. 59, 293; 1971, c. 802, s. 11; c. 806, s. 1; 1987, c. 45, s. 1.)


§ 105-299. Employment of experts.

The board of county commissioners may employ appraisal firms, mapping firms or other

persons or firms having expertise in one or more of the duties of the assessor to assist the

assessor in the performance of these duties. The county may also assign to county agencies, or

contract with State or federal agencies for, any duties involved with the approval or auditing of

use-value accounts. The county may make available to these persons any information it has that

will facilitate the performance of a contract entered into pursuant to this section. Persons

receiving this information are subject to the provisions of G.S. 105-289(e) and G.S. 105-259

regarding the use and disclosure of information provided to them by the county. Any person

employed by an appraisal firm whose duties include the appraisal of property for the county must

be required to demonstrate that he or she is qualified to carry out these duties by achieving a

passing grade on a comprehensive examination in the appraisal of property administered by the

Department of Revenue. In the employment of these firms, primary consideration must be given

to the firms registered with the Department of Revenue pursuant to G.S. 105-289(i). A copy of

the specifications to be submitted to potential bidders and a copy of the proposed contract may

be sent by the board to the Department of Revenue for review before the invitation or acceptance

of any bids. Contracts for the employment of these firms or persons are contracts for personal

services and are not subject to the provisions of Article 8, Chapter 143, of the General Statutes. If

the board of county commissioners employs any person or firm to assist the assessor in the

performance of the assessor's duties, the person or firm may not be compensated, in whole or in

part, on a contingent fee basis or any other similar method that may impair the assessor's

independence or the perception of the assessor's independence by the public. (1939, c. 310, s.

408; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1975, c. 508, s. 2; 1983, c. 813, s. 4; 1985, c. 601, s.

2; 1989, c. 79; 2002-184, s. 7; 2003-416, s. 9; 2012-152, s. 2; 2012-194, s. 61.5(b).)

§ 105-300. Tax commission.


In all counties having a tax commission or comparable agency, the commission or agency

shall, except for levying taxes, perform all the duties required by this Subchapter to be performed

by the board of equalization and review and the board of county commissioners. All expenses

incurred by the tax commission or agency or its appointees in accordance with this Subchapter

shall be paid by the county. Pursuant to Article VI, Sec. 9, of the North Carolina Constitution,

the office of member of a tax commission or comparable agency is hereby declared to be an

office that may not be held concurrently with any other elective or appointive office. (1939, c.

310, s. 410; 1971, c. 806, s. 1.)

Article 17.

Administration of Listing.

§ 105-301. Place for listing real property.

All taxable real property that is not required by this Subchapter to be appraised originally by

the Department of Revenue shall be listed in the county in which it is situated. If all or part of the

real property is situated within the boundaries of a municipal corporation, this fact shall be

specified on the abstract as required by G.S. 105-309. Nothing in this section shall be construed

to conflict with the provisions of G.S. 105-326 through 105-328. (1939, c. 310, s. 700; 1971, c.

806, s. 1; 1973, c. 476, s. 193.)

§ 105-302. In whose name real property is to be listed.

(a) Taxable real property shall be listed in the name of the owner, and it shall be the

owner's duty to list it unless the board of county commissioners shall have adopted a permanent

listing system as provided in G.S. 105-303(b). For purposes of this section, the board of county

commissioners may require that real property be listed in the name of the owner of record as of

the day as of which property is to be listed under G.S. 105-285.

(b) If real property is listed in the name of one other than the person in whose name it

should be listed, and the name of the proper person is later ascertained, the abstract and tax

records shall be corrected to list the property in the name of the person in whose name it should

have been listed. The corrected listing shall have the same force and effect as if the real property

had been listed in the name of the proper person in the first instance.

(c) For purposes of this Subchapter:

(1) The owner of the equity of redemption in real property subject to a mortgage

or deed of trust shall be considered the owner of the property, and such real

property shall be listed in the name of the owner of the equity of redemption.

(2) Real property owned by a corporation shall be listed in the name of the

corporation.

(3) Real property owned by an unincorporated association shall be listed in the

name of the association.

(4) Real property owned by a partnership shall be listed in the name of the

partnership.

(5) Real property held in connection with a sole proprietorship shall be listed in

the name of the owner, and the name and address of the proprietorship shall

be noted on the abstract.

(6) Real property of which a decedent died possessed, if not under the control of

an executor or administrator, shall be listed in the names of the heirs or


devisees if known, but such property may be listed as property of "the heirs"

or "the devisees" of the decedent, without naming them, until they have given

the assessor notice of their names and of the division of the estate. It shall be

the duty of an executor or administrator having control of real property to list

it in his fiduciary capacity, as required by subdivision (c)(7), below, until he is

divested of control of the property. However, the right of an administrator or

executor of a deceased person to petition for the sale of real property to make

assets shall not be considered control of the real property for the purposes of

this subdivision.

(7) Real property, the title to which is held by a trustee, guardian, or other

fiduciary, shall be listed by the fiduciary in his fiduciary capacity except as

otherwise provided in this section.

(8) A life tenant or tenant for the life of another shall be considered the owner of

real property, and it shall be his duty to list the property for taxation,

indicating on the abstract that he is a life tenant or tenant for the life of another

named individual.

(9) Upon request to and with the approval of the assessor, undivided interests in

real property owned by tenants in common who are not copartners may be

listed by the respective owners in accordance with their respective undivided

interests. Otherwise, real property held by tenants in common shall be listed in

the names of all the owners.

(10) Real property owned by husband and wife as tenants by the entirety shall be

listed on a single abstract in the names of both tenants, and the nature of their

ownership shall be indicated thereon.

(11) When land is owned by one party and improvements thereon or special rights

(such as mineral, timber, quarry, waterpower, or similar rights) therein are

owned by another party, the parties shall list their interests separately unless,

in accordance with contractual relations between them, both the land and the

improvements and special rights are listed in the name of the owner of the

land.

(12) If the person in whose name real property should be listed is unknown, or if

title to real property is in dispute, the property shall be listed in the name of

the occupant or, if there be no occupant, in the name of "unknown owner."

Such a listing shall not affect the validity of the lien for taxes created by G.S.

105-355. When the name of the owner is later ascertained, the provisions of

subsection (b), above, shall apply.

(13) Real property, owned under a time-sharing arrangement but managed by a

homeowners association or other managing entity, shall be listed in the name

of the managing entity. (1939, c. 310, s. 701; 1971, c. 806, s. 1; 1983, c. 785,

s. 1; 1987, c. 45, s. 1.)

§ 105-302.1. Reports on properties listed in name of unknown owner.

In order to promote the discovery of "State lands" as defined by G.S. 146-64(6), it shall be

the duty of all assessors upon request to furnish the State of North Carolina a report on all

properties listed in the name of "unknown owner" pursuant to G.S. 105-302(c)(12) in their

respective tax jurisdictions. Such report shall be forwarded to the Secretary of the North


Carolina Department of Administration. The report shall contain all information available to the

assessor concerning the location and identification of the properties in question. (1979, c. 45, s.

1; 1987, c. 45, s.1)

§ 105-303. Obtaining information on real property transfers; permanent listing.

(a) To facilitate the accurate listing of real property for taxation, the board of county

commissioners may require the register of deeds to comply with the provisions of subdivision

(a)(1), below, or it may require him to comply with the provisions of subdivision (a)(2), below:

(1) When any conveyance of real property (other than a deed of trust or

mortgage) is recorded, the board of county commissioners may require the

register of deeds to certify to the assessor:

a. The name of the person conveying the property.

b. The name and address of the person to whom the property is being

conveyed.

c. A description of the property sufficient to locate and identify it.

d. A statement as to whether the parcel is conveyed in whole or in part.

(2) When any conveyance of real property (other than a deed of trust or

mortgage) is submitted for recordation, the board of county commissioners

may require the register of deeds to refuse to record it unless it has been

presented to the assessor and the assessor has noted thereon that he has

obtained the information he desires from the conveyance and from the person

recording it.

(b) The board of commissioners of each county must install a permanent listing system.

Each county must obtain the approval of the Department of Revenue for its permanent listing

system. Under such a system the provisions of subdivisions (b)(1) through (b)(4) of this

subsection apply.

(1) The assessor is responsible for listing all real property on the abstracts and tax

records each year in the name of the owner of record as of the day as of which

property is to be listed under G.S. 105-285.

(2) Persons whose duty it is to list real property under the provisions of G.S.

105-302 are relieved of that duty, but annually, during the listing period

established by G.S. 105-307, these persons must furnish the assessor with the

information concerning improvements on and separate rights in real property

required by G.S. 105-309(c)(3) through (c)(5).

(3) The penalties imposed by G.S. 105-308 and 105-312 do not apply to failure to

list real property for taxation, but they apply to failure to comply with the

provisions of subdivision (b)(2) of this subsection with respect to reporting the

construction or acquisition of improvements on and separate rights in real

property. In such a case, the penalty prescribed by G.S. 105-312 shall be

computed on the basis of the tax imposed on the improvements and separate

rights.

(4) The Department of Revenue may authorize the board of county

commissioners to make additional modifications of the listing requirements of

this Subchapter, as long as the modifications do not conflict with subdivisions

(b)(1) through (b)(3) of this subsection. (1939, c. 310, s. 701; 1971, c. 806, s.

1; 1973, c. 476, s. 193; c. 789; 1987, c. 43, s. 4; c. 45, s. 1; 1999-297, s. 3.)


§ 105-304. Place for listing tangible personal property.

(a) Listing Instructions. – This section applies to all taxable tangible personal property

that has a tax situs in this State and that is not required by this Subchapter to be appraised

originally by the Department of Revenue. The place in this State at which this property is taxable

is determined according to the rules provided in this section. The person whose duty it is to list

property must list it in the county in which the place of taxation is located, indicating on the

abstract the information required by G.S. 105-309(d). If the place of taxation lies within a city or

town that requires separate listing under G.S. 105-326(a), the person whose duty it is to list must

also list the property for taxation in the city or town.

(a1) Repealed by Session Laws 2011-238, s. 1, effective June 23, 2011.


(1) Situated. – More or less permanently located.

(2) Business premises. – The term includes, for purposes of illustration, the

following: Store, mill, dockyard, piling ground, shop, office, mine, farm,

factory, warehouse, rental real estate, place for the sale of property (including

the premises of a consignee), and place for storage (including a public

warehouse).


(c) General Rule. – Except as otherwise provided in subsections (d) through (h) of this

section, tangible personal property is taxable at the residence of the owner. For purposes of this

section:

(1) The residence of an individual person who has two or more places in this State

at which the individual occasionally dwells is the place at which the individual

dwelt for the longest period of time during the calendar year immediately

preceding the date as of which property is to be listed for taxation.

(2) The residence of a domestic or foreign taxpayer other than an individual

person is the place at which its principal North Carolina place of business is

located.

(d) Property of Taxpayers With No Fixed Residence in This State. –

(1) Tangible personal property owned by an individual nonresident of this State is

taxable at the place in this State at which the property is situated.

(2) Tangible personal property owned by a domestic or foreign taxpayer (other

than an individual person) that has no principal office in this State is taxable at

the place in this State at which the property is situated.

(e) Farm Products. – Farm products produced in this State, if owned by their producer,

are taxable at the place in this State at which they were produced.

(f) Property Situated or Commonly Used at Premises Other Than Owner's Residence. –

Subject to the provisions of subsection (e) of this section:

(1) Tangible personal property situated at or commonly used in connection with a

temporary or seasonal dwelling owned or leased by the owner of the personal

property is taxable at the place at which the temporary or seasonal dwelling is

situated.


business premises hired, occupied, or used by the owner of the personal

property (or by the owner's agent or employee) is taxable at the place at which


the business premises is situated. Tangible personal property that may be used

by the public generally or that is used to sell or vend merchandise to the

public falls within the provisions of this subdivision.


premise owned, hired, occupied, or used by a person who is in possession of

the personal property under a business agreement with the property's owner is

taxable at the place at which the possessor's premise is situated. For purposes

of this subdivision, the term "business agreement" means a commercial lease,

a bailment for hire, a consignment, or a similar business arrangement.

(4) In applying the provisions of subdivisions (1), (2), and (3) of this subsection,

the temporary absence of tangible personal property from the place at which it

is taxable under one of those subdivisions on the day as of which property is

to be listed does not affect the application of the rules established in those

subdivisions. The presence of tangible personal property at a location

specified in subdivision (1), (2), or (3) of this subsection on the day as of

which property is to be listed is prima facie evidence that it is situated at or

commonly used in connection with that location.

(g) Decedents. – The tangible personal property of a decedent whose estate is in the

process of administration or has not been distributed is taxable at the place at which it would be

taxable if the decedent were still alive and still residing at the place at which the decedent resided

at the time of death.

(h) Beneficial Ownership. – Tangible personal property within the jurisdiction of the

State held by a resident or nonresident trustee, guardian, or other fiduciary having legal title to

the property is taxable in accordance with the following rules:

(1) If any beneficiary is a resident of the State, an amount representing that

beneficiary's portion of the property is taxable at the place at which it would

be taxable if the beneficiary owned that portion.

(2) If any beneficiary is a nonresident of the State, an amount representing that

beneficiary's portion of the property is taxable at the place at which it would

be taxable if the fiduciary were the beneficial owner of the property. (1939, c.

310, s. 800; 1947, c. 836; 1951, c. 1102, s. 1; 1955, c. 1012, ss. 2, 3; 1969, c.

940; 1971, c. 806, s. 1; 1973, c. 476, s. 193; c. 1180; 2001-279, s. 1; 2006-30,

s. 1; 2011-238, s. 1.)

§ 105-305. Place for listing intangible personal property.

(a) Listing Instructions. – This section applies to all taxable intangible personal property

that has a tax situs in this State and is not required by this Subchapter to be appraised originally

by the Department of Revenue. The place in this State at which this property is taxable shall be

determined as provided in this section. The person whose duty it is to list property shall list it in

the county in which the place of taxation is located, indicating on the abstract the information

required by G.S. 105-309(d). If the place of taxation lies within a city or town that requires

separate listing under G.S. 105-326(a), the person whose duty it is to list shall also list the

property for taxation in the city or town.

(b) Repealed by Session Laws 1997-456, s. 43(a).


(c) Intangible personal property representing an interest or interests in real property that

is situated in this State shall be taxable in the place in which the represented real property is

located.

(d), (e) Repealed by Session Laws 1997-456, s. 43(a). (1939, c. 310, s. 801; 1971, c. 806, s.

1; 1973, c. 476, s. 193; 1995, c. 41, s. 8; 1997-456, s. 43(a).)

§ 105-306. In whose name personal property is to be listed.

(a) Taxable personal property shall be listed in the name of the owner on the day as of

which property is to be listed for taxation, and it shall be the duty of the owner to list the

property.

(b) If personal property is listed in the name of a person other than the one in whose

name it should be listed, and the name of the proper person is later ascertained, the abstract and

tax records shall be corrected to list the property in the name in which it should have been listed.

The corrected listing shall have the same force and effect as if the personal property had been

listed in the name of the proper person in the first instance.

(c) For purposes of this Subchapter:

(1) The owner of the equity of redemption in personal property subject to a

chattel mortgage shall be considered the owner of the property.

(2) The vendee of personal property under a conditional bill of sale, or under any

other sale contract through which title to the property is retained by the vender

as security for the payment of the purchase price, shall be considered the

owner of the property if he has possession of or the right to use the property.

(3) Personal property owned by a corporation, partnership, or unincorporated

association shall be listed in the name of the corporation, partnership, or

unincorporated association.

(4) Personal property held in connection with a sole proprietorship shall be listed

in the name of the owner, and the name and address of the proprietorship shall

be noted on the abstract.

(5) Personal property of which a decedent died possessed, if not under the control

of a personal representative, shall be listed in the names of the next of kin or

devisees if known, but such property may be listed as property of "the next of

kin" or "the devisees" of the decedent, without naming them, until they have

given the assessor notice of their names and of the division of the estate. It

shall be the duty of a personal representative having control of personal

property to list it in the personal representative's fiduciary capacity, as

required by subdivision (c)(6), below, until the personal representative is

divested of control of the property.

(6) Personal property, the title to which is held by a trustee, guardian, or other

fiduciary, shall be listed by the fiduciary in his fiduciary capacity except as

otherwise provided in this section.

(7) If personal property is owned by two or more persons who are joint owners,

each owner shall list the value of his interest. However, if the joint owners are

husband and wife, the property owned jointly shall be listed on a single

abstract in the names of both the husband and the wife.

(8) If the person in whose name personal property should be listed is unknown, or

if the ownership of the property is in dispute, the property shall be listed in the


name of the person in possession of the property, or if there appears to be no

person in possession, in the name of "unknown owner." When the name of the

owner is later ascertained, the provisions of subsection (b), above, shall apply.

(9) Personal property, owned under a time-sharing arrangement but managed by a

homeowners association or other managing entity, shall be listed in the name

of the managing entity. (1939, c. 310, s. 802; 1971, c. 806, s. 1; 1983, c. 785,

s. 2; 1987, c. 45, s. 1; 2011-284, s. 71.)

§ 105-307. Length of listing period; extension; preliminary work.

(a) Listing Period. – Unless extended as provided in this section, the period during which

property is to be listed for taxation each year begins on the first business day of January and ends

on January 31.

(b) General Extensions. – The board of county commissioners may, by resolution, extend

the time during which property is to be listed for taxation as provided in this subsection. Any

action by the board of county commissioners extending the listing period must be recorded in the

minutes of the board, and notice of the extensions must be published as required by G.S.

105-296(c). The entire period for listing, including any extension of time granted, is considered

the regular listing period for the particular year within the meaning of this Subchapter.

(1) In nonrevaluation years, the listing period may be extended for up to 30

additional days.

(2) In years of octennial appraisal of real property, the listing period may be

extended for up to 60 additional days.

(3) If the county has provided for electronic listing of personal property under

G.S. 105-310.1, the period for electronic listing of personal property may be

extended up to June 1. A resolution that provides a general extension of time

for the electronic listing of personal property shall continue in effect until

revised or rescinded unless otherwise stated in the resolution.

(c) Individual Extensions. – The board of county commissioners shall grant individual

extensions of time for the listing of real and personal property upon written request and for good

cause shown. The request must be filed with the assessor no later than the ending date of the

regular listing period. The board may delegate the authority to grant extensions to the assessor.

Extensions granted under this subsection shall not extend beyond April 15. Notwithstanding the

individual extension time limitation in this subsection, if the county has provided for electronic

listing of personal property under G.S. 105-310.1, extensions granted for electronic listing of

personal property shall not extend beyond June 1.

(d) Preliminary Work. – The assessor may conduct preparatory work before the listing

period begins, but may not make a final appraisal of property before the day as of which the

value of the property is to be determined under G.S. 105-285. (1939, c. 310, s. 905; 1971, c.

806, s. 1; 1973, cc. 141, 706; 1975, c. 49; 1977, c. 360; 1987, c. 43, s. 5; c. 45, s. 1; 2001-279, s.

2; 2006-30, s. 2; 2011-238, s. 3.)

§ 105-308. Duty to list; penalty for failure.

Every person in whose name any property is to be listed under the terms of this Subchapter

shall list the property with the assessor within the time allowed by law on an abstract setting

forth the information required by this Subchapter.


In addition to all other penalties prescribed by law, any person whose duty it is to list any

property who willfully fails or refuses to list the same within the time prescribed by law shall be

guilty of a Class 2 misdemeanor. The failure to list shall be prima facie evidence that the failure

was willful.

Any person who willfully attempts, or who willfully aids or abets any person to attempt, in

any manner to evade or defeat the taxes imposed under this Subchapter, whether by removal or

concealment of property or otherwise, shall be guilty of a Class 2 misdemeanor. (1939, c. 310, s.

901; 1957, c. 848; 1971, c. 806, s. 1; 1977, c. 92; 1987, c. 43, s. 4, c. 45, s. 1; 1993, c. 539, s.

717; 1994, Ex. Sess., c. 24, s. 14(c).)

§ 105-309. What the abstract shall contain.

(a) Each person whose duty it is to list property for taxation shall file each year with the

assessor a tax list or abstract showing, as of the date prescribed by G.S. 105-285(b), the

information required by this section. Subject to the provisions of subdivisions (a)(1) and (a)(2),

below, each person whose duty it is to list property for taxation shall file a separate abstract.

(1) Tenants by the entirety shall file a single abstract listing the real property so

held, together with all personal property they own jointly.

(2) Tenants in common shall file a single abstract listing the real property so held,

together with all personal property that they own jointly, unless, as provided

in G.S. 105-302(c)(9), the assessor allows them to list their undivided interests

in the real property on separate abstracts.

(b) Each abstract shall show the taxpayer's name; residence address; and, if required by

the assessor, business address.

(1) An individual trading under a firm name shall show his name and address and

also the name and address of his business firm.

(2) An unincorporated association shall show both the name and address of the

association and the names and addresses of its principal officers.

(3) A partnership shall show both the name and address of the partnership and the

names and addresses of its full partners.

(c) Each tract, parcel, or lot of real property owned or controlled in the county shall be

listed in accordance with the following instructions:

(1) Real property not divided into lots shall be described by giving:

a. The township in which located.

b. The total number of acres in the tract, or, if smaller than one acre, the

dimensions of the parcel.

c. The tract name (if any), the names of at least two adjoining

landowners, a reference to the tract's designation on any map

maintained in the office of the assessor or on file in the office of the

register of deeds, or some other description sufficient to identify and

locate the property by parol testimony.

d. If applicable, the number of acres of:

1. Cleared land;

2. Woods and timberland;

3. Land containing mineral or quarry deposits;

4. Land susceptible of development for waterpower;

5. Wasteland.


e. The portion of the tract or parcel located within the boundaries of any

municipality.

(2) Real property divided into lots shall be described by giving:

a. The township in which located.

b. The dimensions of the lot.

c. The location of the lot, including its street number (if any).

d. The lot's designation on any map maintained in the office of the

assessor or on file in the office of the register of deeds, or some

description sufficient to identify and locate the property by parol

testimony.

e. The portion of the lot located within the boundaries of any

municipality.

(3) In conjunction with the listing of any real property under subdivisions (c)(1)

and (c)(2), above, there shall be given a short description of any buildings and

other improvements thereon that belong to the owner of the land.

(4) Buildings and other improvements having a value in excess of one hundred

dollars ($100.00) that have been acquired, begun, erected, damaged, or

destroyed since the time of the last appraisal of property shall be described.

(5) If some person other than the owner of a tract, parcel, or lot shall own any

buildings or other improvements thereon or separate rights (such as mineral,

quarry, timber, waterpower, or other rights) therein, that fact shall be specified

on the abstract on which the land is listed, together with the name and address

of the owner of the buildings, other improvements, or rights.

a. Buildings, other improvements, and separate rights owned by a

taxpayer with respect to the lands of another shall be listed separately

and identified so as to indicate the name of the owner thereof and the

tract, parcel, or lot on which the buildings or other improvements are

situated or to which the separate rights appertain.

b. In accordance with the provisions of G.S. 105-302(c)(11), buildings or

other improvements or separate rights owned by a taxpayer with

respect to the lands of another may be listed either in the name of the

owner of the buildings, other improvements, or rights, or in the name

of the owner of the land.

(d) Personal property shall be listed to indicate the township and municipality, if any, in

which it is taxable and shall be itemized by the taxpayer in such detail as may be prescribed by

an abstract form approved by the Department of Revenue. The assessor may require additional

information as follows:

(1) If the assessor considers it necessary to obtain a complete listing of personal

property, the assessor may require a taxpayer to submit additional

information, inventories, or itemized lists of personal property.

(2) At the request of the assessor, the taxpayer shall furnish any information the

taxpayer has with respect to the true value of the personal property the

taxpayer is required to list.

(e) At the end of the abstract each person whose duty it is to list property for taxation

shall sign the affirmation required by G.S. 105-310.


(f) The assessor must print a homestead tax relief notice on each abstract or on an

information sheet distributed with the abstract. The abstract or sheet must include the address

and telephone number of the assessor below the notice required by this section. The notice must

be in the form required by the Department of Revenue designed to notify the taxpayer of his or

her rights and responsibilities under the homestead property tax exclusion provided in G.S.

105-277.1 and the property tax homestead circuit breaker provided in G.S. 105-277.1B.

(g) Any person who fails to give the notice required by G.S. 105-309(f) shall not only be

subject to loss of the exemption, but also to the penalties provided by G.S. 105-312, and also if

willful to the penalty provided in G.S. 105-310. For the purpose of determining whether a

penalty is levied, whenever a taxpayer has received an exemption under G.S. 105-277.1 for one

taxable year but the property of taxpayer is not eligible for the exemption the next year, notice

given of that fact to the assessor on or before April 15 shall be considered as timely filed. (1939,

c. 310, s. 900; 1941, c. 221, s. 1; 1953, c. 970, s. 6; 1955, c. 34; 1971, c. 806, s. 1; 1973, c. 448, s.

2; c. 476, s. 193; 1975, c. 881, s. 3; 1977, c. 666, s. 2; 1979, c. 846, s. 2; 1981, c. 54, ss. 4-6; c.

1052, s. 1; 1985, c. 656, ss. 47, 51; 1985 (Reg. Sess., 1986), c. 947, s. 9; c. 982, s. 23; 1987, c.

43, s. 6; c. 45, s. 1; 1993, c. 360, s. 2; 1996, 2nd Ex. Sess., c. 18, s. 15.1(b); 1998-98, s. 111;

2001-308, s. 2; 2007-484, s. 43.7T(b); 2007-497, s. 2.5; 2014-3, s. 14.20(a).)

§ 105-310. Affirmation; penalty for false affirmation.

There shall be annexed to the abstract on which the taxpayer's property is listed the following

affirmation, which shall be signed by an individual qualified under the provisions of G.S.

105-311:

Under penalties prescribed by law, I hereby affirm that to the best of my knowledge and

belief this listing, including any accompanying statements, inventories, schedules, and other

information, is true and complete. (If this affirmation is signed by an individual other than the

taxpayer, he affirms that he is familiar with the extent and true value of all the taxpayer's

property subject to taxation in this county and that his affirmation is based on all the information

of which he has any knowledge.)

Any individual who willfully makes and subscribes an abstract listing required by this

Subchapter which he does not believe to be true and correct as to every material matter shall be

guilty of a Class 2 misdemeanor. (1939, c. 310, s. 902; 1971, c. 806, s. 1; 1993, c. 539, s. 718;

1994, Ex. Sess., c. 24, s. 14(c).)

§ 105-310.1. Electronic listing of personal property.

(a) Personal property may be listed by electronic listing as provided in this section.

(b) The Department of Revenue may establish, after consultation with the counties, the

standards and requirements for electronic listing of personal property, including the minimum

requirements that must exist before electronic listing will be allowed in a county.

(c) The board of county commissioners may, by resolution, provide for electronic listing

of personal property in accordance with the standards and requirements prescribed by the

Department of Revenue. The board of county commissioners may, by resolution, delegate its

authority to provide for electronic listing of personal property to the county assessor.

(d) Definitions. – The following definitions apply in this section:

(1) Electronic. – Defined in G.S. 66-312.

(2) Electronic listing. – The filing by electronic means of the abstract required by

G.S. 105-309 and the affirmation required by G.S. 105-310. (2011-238, s. 4.)


§ 105-311. Listing and signing affirmation; use of agents, mail, and electronic listing.

(a) Except as otherwise provided in this section, the person whose duty it is to list

property for taxation shall file the completed abstract with the assessor for purposes of listing

and shall sign the affirmation required by G.S. 105-310 to be annexed to the completed abstract

on which the property is listed. The abstract must be filed with the assessor on a form approved

by the Department of Revenue.

(1) In the case of an individual taxpayer who is unable to list his property, a

guardian, authorized agent, or other person having knowledge of and charged

with the care of the person and property of the taxpayer shall file the

completed abstract and shall sign the required affirmation in the name of the

taxpayer, noting thereon the capacity in which he signs.

(2) In the case of a corporation, partnership, limited liability company, or

unincorporated association, a person specified in sub-subdivision a., b., or c.

below, shall file the completed abstract and shall sign the required affirmation

in the name of the taxpayer, noting thereon the capacity in which he signs, and

no other agent shall be permitted to sign the affirmation required on such a

taxpayer's abstract:

a. A principal officer of the taxpayer.

b. A full-time employee of the taxpayer who has been officially

empowered by a principal officer of the taxpayer in his behalf to list

the taxpayer's property for taxation in the county and to sign the

affirmation annexed to the abstract or abstracts on which its property is

listed.

c. An agent of the taxpayer authorized by a principal officer of the

taxpayer in a manner prescribed by the Department of Revenue.


(b) Abstracts may be submitted in person or by mail. Additionally, if the county has

provided for electronic listing of personal property under G.S. 105-310.1, personal property

abstracts may be submitted by electronic listing.

(1) Submission by mail. – In no event shall an abstract submitted by mail be

accepted unless the affirmation on the abstract is signed by the individual

prescribed in subsection (a) of this section. For the purpose of this Subchapter,

abstracts submitted by mail are considered filed as of the date shown on the

postmark affixed by the United States Postal Service. If no date is shown on

the postmark, or if the postmark is not affixed by the United States Postal

Service, the abstract is considered filed when received in the office of the

assessor.

(2) Submission by electronic listing. – In no event shall an abstract submitted by

electronic listing be accepted unless the affirmation on the abstract is signed

by the individual prescribed in subsection (a) of this section. The affirmation

may be signed using an electronic signature method approved by the

Department of Revenue. For the purpose of this Subchapter, abstracts

submitted by electronic listing are considered filed when received in the office

of the assessor as denoted by timestamps applied by the receiving equipment

or programs.


(c) In any dispute arising under this Subchapter, the burden of proof is on the taxpayer to

show that the abstract was timely filed. (1939, c. 310, ss. 901, 903, 904; 1957, c. 848; 1971, c.

806, s. 1; 1973, c. 476, s. 193; 1977, c. 327, s. 1; 1987, c. 43, s. 7; c. 45, s. 1; 2001-279, s. 3;

2001-487, s. 70; 2011-238, s. 5.)

§ 105-312. Discovered property; appraisal; penalty.


(b) Duty to Discover and Assess Unlisted Property. – It shall be the duty of the assessor

to see that all property not properly listed during the regular listing period be listed, assessed and

taxed as provided in this Subchapter. The assessor shall file reports of such discoveries with the

board of commissioners in such manner as the board may require.

(c) Carrying Forward Real Property. – At the close of the regular listing period each year,

the assessor shall compare the tax lists submitted during the listing period just ended with the

lists for the preceding year, and he shall carry forward to the lists of the current year all real

property that was listed in the preceding year but that was not listed for the current year. When

carried forward, the real property shall be listed in the name of the taxpayer who listed it in the

preceding year unless, under the provisions of G.S. 105-302, it must be listed in the name of

another taxpayer. Real property carried forward in this manner shall be deemed to be discovered

property, and the procedures prescribed in subsection (d), below, shall be followed unless the

property discovered is listed in the name of the taxpayer who listed it for the preceding year and

the property is not subject to appraisal under either G.S. 105-286 or G.S. 105-287 in which case

no notice of the listing and valuation need be sent to the taxpayer.

(d) Procedure for Listing, Appraising, and Assessing Discovered Property. – Subject to

the provisions of subsection (c), above, and the presumptions established by subsection (f),

below, discovered property shall be listed by the assessor in the name of the person required by

G.S. 105-302 or G.S. 105-306. The discovery shall be deemed to be made on the date that the

abstract is made or corrected pursuant to subsection (e) of this section. The assessor shall also

make a tentative appraisal of the discovered property in accordance with the best information

available to him.

When a discovery is made, the assessor shall mail a notice to the person in whose name the

discovered property has been listed. The notice shall contain the following information:

(1) The name and address of the person in whose name the property is listed;

(2) A brief description of the property;

(3) A tentative appraisal of the property;

(4) A statement to the effect that the listing and appraisal will become final unless

written exception thereto is filed with the assessor within 30 days from date of

the notice.

Upon receipt of a timely exception to the notice of discovery, the assessor shall arrange a

conference with the taxpayer to afford him the opportunity to present any evidence or argument

he may have regarding the discovery. Within 15 days after the conference, the assessor shall give

written notice to the taxpayer of his final decision. Written notice shall not be required, however,

if the taxpayer signs an agreement accepting the listing and appraisal. In cases in which

agreement is not reached, the taxpayer shall have 15 days from the date of the notice to request

review of the decision of the assessor by the board of equalization and review or, if that board is

not in session, by the board of commissioners. Unless the request for review by the county board

is given at the conference, it shall be made in writing to the assessor. Upon receipt of a timely


request for review, the provisions of G.S. 105-322 or G.S. 105-325, as appropriate, shall be

followed.

(e) Record of Discovered Property. – When property is discovered, the taxpayer's

original abstract (if one was submitted) may be corrected or a new abstract may be prepared to

reflect the discovery. If a new abstract is prepared, it may be filed with the abstracts that were

submitted during the regular listing period, or it may be filed separately with abstracts designated

"Late Listings." Regardless of how filed, the listing shall have the same force and effect as if it

had been submitted during the regular listing period.

(f) Presumptions. – When property is discovered and listed to a taxpayer in any year, it

shall be presumed that it should have been listed by the same taxpayer for the preceding five

years unless the taxpayer shall produce satisfactory evidence that the property was not in

existence, that it was actually listed for taxation, or that it was not his duty to list the property

during those years or some of them under the provisions of G.S. 105-302 and G.S. 105-306. If it

is shown that the property should have been listed by some other taxpayer during some or all of

the preceding years, the property shall be listed in the name of the appropriate taxpayer for the

proper years, but the discovery shall still be deemed to have been made as of the date that the

assessor first listed it.

(g) Taxation of Discovered Property. – When property is discovered, it shall be taxed for

the year in which discovered and for any of the preceding five years during which it escaped

taxation in accordance with the assessed value it should have been assigned in each of the years

for which it is to be taxed and the rate of tax imposed in each such year. The penalties prescribed

by subsection (h) of this section shall be computed and imposed regardless of the name in which

the discovered property is listed. If the discovery is based upon an understatement of value,

quantity, or other measurement rather than an omission from the tax list, the tax shall be

computed on the additional valuation fixed upon the property, and the penalties prescribed by

subsection (h) of this section shall be computed on the basis of the additional tax.

(h) Computation of Penalties. – Having computed each year's taxes separately as

provided in subsection (g), above, there shall be added a penalty of ten percent (10%) of the

amount of the tax for the earliest year in which the property was not listed, plus an additional ten

percent (10%) of the same amount for each subsequent listing period that elapsed before the

property was discovered. This penalty shall be computed separately for each year in which a

failure to list occurred; and the year, the amount of the tax for that year, and the total of penalties

for failure to list in that year shall be shown separately on the tax records; but the taxes and

penalties for all years in which there was a failure to list shall be then totalled on a single tax

receipt.

(h1) Repealed by Session Laws 1991, c. 624, s. 8.

(i) Collection. – For purposes of tax collection and foreclosure, the total figure obtained

and recorded as provided in subsection (h) of this section shall be deemed to be a tax for the

fiscal year beginning on July 1 of the calendar year in which the property was discovered. The

schedule of discounts for prepayment and interest for late payment applicable to taxes for the

fiscal year referred to in the preceding sentence shall apply when the total figure on the single tax

receipt is paid. Notwithstanding the time limitations contained in G.S. 105-381, any property

owner who is required to pay taxes on discovered property as herein provided shall be entitled to

a refund of any taxes erroneously paid on the same property to other taxing jurisdictions in North

Carolina. Claim for refund shall be filed in the county where such tax was erroneously paid as

provided by G.S. 105-381.


(j) Tax Receipts Charged to Collector. – Tax receipts prepared as required by

subsections (h) and (i) of this section for the taxes and penalties imposed upon discovered

property shall be delivered to the tax collector, and he shall be charged with their collection.

Such receipts shall have the same force and effect as if they had been delivered to the collector at

the time of the delivery of the regular tax receipts for the current year, and the taxes charged in

the receipts shall be a lien upon the property in accordance with the provisions of G.S. 105-355.

(k) Power to Compromise. – After a tax receipt computed and prepared as required by

subsections (g) and (h) of this section has been delivered and charged to the tax collector as

prescribed in subsection (j), above, the board of county commissioners, upon the petition of the

taxpayer, may compromise, settle, or adjust the county's claim for taxes arising therefrom. The

board of commissioners may, by resolution, delegate the authority granted by this subsection to

the board of equalization and review, including any board created by resolution pursuant to G.S.

105-322(a) and any special board established by local act.

(l) Municipal Corporations. – The provisions of this section shall apply to all cities,

towns, and other municipal corporations having the power to tax property. Such governmental

units shall designate an appropriate municipal officer to exercise the powers and duties assigned

by this section to the assessor, and the powers and duties assigned to the board of county

commissioners shall be exercised by the governing body of the unit. When the assessor discovers

property having a taxable situs in a municipal corporation, he shall send a copy of the notice of

discovery required by subsection (d) to the governing body of the municipality together with

such other information as may be necessary to enable the municipality to proceed. The governing

board of a municipality may, by resolution, delegate the power to compromise, settle, or adjust

tax claims granted by this subsection and by subsection (k) of this section to the county board of

equalization and review, including any board created by resolution pursuant to G.S. 105-322(a)

and any special board established by local act. (1939, c. 310, s. 1109; 1971, c. 806, s. 1; 1973, c.

476, s. 193; c. 787; 1977, c. 864; 1981, c. 623, ss. 1, 2; 1987, c. 45, s. 1; c. 743, ss. 1, 2; 1989, c.

522; 1991, c. 34, s. 4; c. 624, s. 8; 1991 (Reg. Sess., 1992), c. 961, s. 12; 1999-297, s. 2.)

Article 18.

Reports in Aid of Listing.

§ 105-313. Report of property by multi-county business.

A taxpayer who is engaged in business in more than one county in this State and who owns

real property or tangible personal property in connection with his multi-county business shall,

upon the request of the Department of Revenue or the assessor of a county in which part of this

business property is situated, file a report with the Department of Revenue stating, as of the dates

specified in G.S. 105-285 of any year, the following information:

(1) The counties in this State in which the taxpayer's business property is situated;

(2) The taxpayer's investment, on a county by county basis, in his business

property situated in this State, categorized as the Department of Revenue or

the assessor may require; and

(3) The taxpayer's total investment in his business property situated in this State,

categorized as the Department of Revenue or the assessor may require.

This report shall be subscribed and sworn to by the owner of the property. If the owner is a

corporation, partnership, or unincorporated association, the report shall be subscribed and sworn


to by a principal officer of the owner who has knowledge of the facts contained in the report.

(1971, c. 806, s. 1; 1973, c. 476, s. 193; 1987, c. 777, s. 3.)

§ 105-314: Repealed by Session Laws 1991, c. 761, s. 37.4.

§ 105-315. Report by persons having custody of tangible personal property of others.

(a) As of January 1, every person having custody of taxable tangible personal property

that has been entrusted to the person by another for storage, sale, renting, or any other business

purpose shall furnish to the assessor of the county in which the property is situated a report with

the information listed in this subsection. This requirement does not apply to a person having

custody of inventories exempt under G.S. 105-275(32a), 105-275(33), or 105-275(34). As used

in this section, the term "person having custody of taxable tangible personal property" includes

warehouses, cooperative growers' and marketing associations, consignees, factors, commission

merchants, and brokers. The report must include all of the following:


(2) The name of the owner of the property.

(3) A description of the property.

(4) The quantity of the property.

(5) The amount of money, if any, advanced against the property by the person

having custody of the property.

(b) A person who fails to make the report required by this section, by January 15 in any

year is liable to the counties in which the property is taxable for a penalty to be measured by any

portion of the tax on the property that has not been paid at the time the action to collect this

penalty is brought plus two hundred fifty dollars ($250.00). This penalty may be recovered in a

civil action in the appropriate division of the General Court of Justice of the county in which the

property is taxable. Upon recovery of this penalty, the tax on the property is deemed paid.

(1939, c. 310, ss. 1001, 1002; 1955, c. 1069, ss. 2, 3; 1965, c. 592; 1971, c. 806, s. 1; 1987, c. 45,

s. 1; c. 813, s. 14; 2014-3, s. 14.21.)

§ 105-316. Reports by house trailer park, marina, and aircraft storage facility operators.

(a) As of January 1 each year:

(1) Every operator of a park or storage lot renting or leasing space for three or

more house trailers or mobile homes shall furnish to the assessor of the

county in which the park or lot is located the name of the owner of and a

description of each house trailer or mobile home situated thereon.

(2) Every operator of a marina or comparable facility renting, leasing, or

otherwise providing dockage or storage space for three or more boats, vessels,

floating homes, or floating structures shall furnish to the assessor of the

county in which the marina or comparable facility is located the name of the

owner of and a description of each boat, vessel, floating home, or floating

structure for which dockage or storage space is rented, leased, or otherwise

provided.

(3) Every operator of a storage facility renting or leasing space for three or more

airplanes or other aircraft shall furnish to the assessor of the county in which

the storage facility is located the name of the owner of and a description of

each airplane or aircraft for which space is rented or leased.


(b) Any person who fails to make any report required by subsection (a), above, by

January 15 of any year shall be liable to the county in which the house trailers, mobile homes,

boats, vessels, floating homes, floating structures, or airplanes are taxable for a penalty to be

measured by any portion of the tax on the personal property that has not been paid at the time the

action to collect this penalty is brought, plus two hundred fifty dollars ($250.00). This penalty

may be recovered in a civil action in the appropriate division of the General Court of Justice of

the county in which the personal property is taxable. Upon recovery of this penalty, the tax on

the personal property shall be deemed to be paid. (1939, c. 310, s. 1002; 1955, c. 1069, s. 3;

1965, c. 592; 1971, c. 806, s. 1; 1985, c. 378, ss. 1, 2; 1987, c. 45, s. 1.)

§ 105-316.1. Tax permit required to move mobile home.

(a) In order to protect the local taxing units of this State against the nonpayment of ad

valorem taxes on mobile homes, it is hereby declared to be unlawful for any person other than a

mobile home manufacturer or retailer to remove or cause to be removed any mobile home

situated at a premises in this State without first obtaining a tax permit from the tax collector of

the county in which the mobile home is situated. The tax permit shall be conspicuously displayed

near the license tag on the rear of the mobile home at all times during its transportation. Permits

required by G.S. 105-316.1 through 105-316.8 may be obtained at the office of the county tax

collector during normal business hours.

(b) Except as provided in G.S. 105-316.4, manufacturers, retailers and licensed carriers

of mobile homes shall not be required to obtain the tax permits required by this section. Persons

or firms transporting mobile homes shall, however, be responsible for seeing that a proper

license tag, and when required under this section, a tax permit, are properly displayed thereon at

all times during their transportation. (1975, c. 881, s. 1; 1977, 2nd Sess., c. 1187, ss. 1, 2.)

§ 105-316.2. Requirements for obtaining permit.

(a) In order to obtain the permits herein provided, persons other than manufacturers and

retailers of mobile homes shall be required to (i) pay all taxes due to be paid by the owner to the

county or to any other taxing unit therein; or (ii) show proof to the tax collector that no taxes are

due to be paid; or (iii) demonstrate to the tax collector that the removal of the mobile home will

not jeopardize the collection of any taxes due or to become due to the county or to any taxing

unit therein.

(b) In addition to complying with the provisions of subsection (a) above, owners of

mobile homes required to obtain the permits herein provided shall also furnish the following

information to the tax collector:

(1) The name and address of the owner,

(2) The address or location of the premises from which the mobile home is to be

moved,

(3) The address or location of the place to which the mobile home is to be moved,

and

(4) The name and address of the carrier who is to transport the mobile home.

(1975, c. 881, s. 1.)

§ 105-316.3. Issuance of permits.

(a) Except as otherwise provided in G.S. 105-316.2 above, no permit required by G.S.

105-316.1 through 105-316.8 shall be issued by the tax collector unless and until all taxes due to


be paid by the owner to the county or to any other taxing unit therein, including any penalties or

interest thereon, have been paid. Any taxes which have not yet been computed but which will

become due during the current calendar year shall be determined as in the case of prepayments.

(b) Upon compliance with the provisions of G.S. 105-316.1 through 105-316.8, the tax

collector shall issue, without charge, a permit authorizing the removal of the mobile home. He

shall also maintain a record of all permits issued. (1975, c. 881, s. 1.)

§ 105-316.4. Issuance of permits under repossession.

Notwithstanding the provisions of G.S. 105-316.2(a) and 105-316.3(a), above, any person

who intends to take possession of a mobile home, whether by judicial or nonjudicial authority, as

a holder of a lien on said mobile home shall apply for, and be issued, the permit herein provided

without paying all taxes due to be paid by the owner of the mobile home being repossessed, upon

notifying the tax collector of the location in North Carolina to which the mobile home is to be

taken. At the time of notification the tax collector shall render to the holder of the lien a

statement of taxes due against only the mobile home. Within seven days of the issuance of the

permit the applicant shall pay to the tax collector the taxes due as set forth in the statement.

Notwithstanding the foregoing, any applicant who is a nonresident of North Carolina must

pay the taxes due as set forth above at the time of notification to the tax collector and application

for the permit.

Upon issuance of the permit and the payment of any taxes as prescribed herein, the mobile

home shall no longer be subject to levy or attachment of any lien for any other taxes then owed

by the owner thereof, whether or not previously determined. (1975, c. 881, s. 1; 1977, 2nd Sess.,

c. 1187, s. 3.)

§ 105-316.5. Form of permit.

The permit shall be in substantially the following form:

TAX PERMIT

County of ___________ Permit Number ___________________________________

State of North Carolina Date of Issuance __________________________________

Permission is hereby granted to: ____________________________________________

(Name & address of owner)

______________________________________________________________________

(Name & address of carrier)

to remove the following described mobile home:

______________________________________________________________________

(Make, model, size, serial number, etc.)

From: ______________________________________________________________________

(Address)

To: ______________________________________________________________________

(Address)

This permit is issued in accordance with the provisions of G.S. 105-316.1 through G.S.

105-316.8 of the General Statutes of North Carolina.


(Signed)

_____________________________________

Tax Collector

(or Deputy Tax Collector)

County of _____________________________

(1975, c. 881, s. 1; 1977, 2nd Sess., c. 1187, s. 1.)

§ 105-316.6. Penalties for violations.

(a) Any person required by G.S. 105-316.1 through 105-316.8 to obtain a tax permit who

fails to do so or who fails to properly display same shall be guilty of a Class 3 misdemeanor.

This penalty shall be in addition to any penalties imposed for failure to list property for taxation

and interest for failure to pay taxes provided by the general laws of this State.

(b) Any manufacturer or retailer of mobile homes who aids or abets any owner covered

by G.S. 105-316.1 through 105-316.8 to defeat in any manner the purpose of G.S. 105-316.1

through 105-316.8 shall be guilty of a Class 3 misdemeanor.

(c) Any person who transports a mobile home from a location in this State for an owner

other than a manufacturer or retailer of mobile homes without having properly displayed thereon

the tax permit required by G.S. 105-316.1 through 105-316.8 shall be guilty of a Class 3

misdemeanor.

(d) Any law-enforcement officer of this State who apprehends any person violating the

provisions of G.S. 105-316.1 through 105-316.8 shall detain such person and mobile home until

satisfactory arrangements have been made to meet the requirements of G.S. 105-316.1 through

105-316.8. (1975, c. 881, s. 1; 1977, 2nd Sess., c. 1187, ss. 1, 4, 5; 1993, c. 539, s. 719; 1994,

Ex. Sess., c. 24, s. 14(c).)

§ 105-316.7. Mobile home defined.

For the purpose of G.S. 105-316.1 through 105-316.8, "mobile home" means a structure that

(i) is designed, constructed, and intended for use as a dwelling house, office, place of business,

or similar place of habitation and (ii) is capable of being transported from place to place on

wheels attached to its frame. It also means a manufactured home as described in G.S.

105-273(13). This definition does not include trailers and vehicles required to be registered

annually pursuant to Part 3, Article 3 of Chapter 20 of the General Statutes. (1975, c. 881, s. 1;

1987, c. 805, s. 4.)

§ 105-316.8. Taxable situs not presumed.

Nothing in G.S. 105-316.1 through 105-316.8 shall be interpreted so as to subject to taxation

any mobile home which does not have a taxable situs within this State under the general rules of

law appropriate to such a determination. (1975, c. 881, s. 1.)

Article 19.

Administration of Real and Personal Property Appraisal.

§ 105-317. Appraisal of real property; adoption of schedules, standards, and rules.

(a) Whenever any real property is appraised it shall be the duty of the persons making

appraisals:


(1) In determining the true value of land, to consider as to each tract, parcel, or lot

separately listed at least its advantages and disadvantages as to location;

zoning; quality of soil; waterpower; water privileges; dedication as a nature

preserve; conservation or preservation agreements; mineral, quarry, or other

valuable deposits; fertility; adaptability for agricultural, timber-producing,

commercial, industrial, or other uses; past income; probable future income;

and any other factors that may affect its value except growing crops of a

seasonal or annual nature.

(2) In determining the true value of a building or other improvement, to consider

at least its location; type of construction; age; replacement cost; cost;

adaptability for residence, commercial, industrial, or other uses; past income;

probable future income; and any other factors that may affect its value.

(3) To appraise partially completed buildings in accordance with the degree of

completion on January 1.

(b) In preparation for each revaluation of real property required by G.S. 105-286, it shall

be the duty of the assessor to see that:

(1) Uniform schedules of values, standards, and rules to be used in appraising real

property at its true value and at its present-use value are prepared and are

sufficiently detailed to enable those making appraisals to adhere to them in

appraising real property.


(3) A separate property record be prepared for each tract, parcel, lot, or group of

contiguous lots, which record shall show the information required for

compliance with the provisions of G.S. 105-309 insofar as they deal with real

property, as well as that required by this section. (The purpose of this

subdivision is to require that individual property records be maintained in

sufficient detail to enable property owners to ascertain the method, rules, and

standards of value by which property is appraised.)

(4) The property characteristics considered in appraising each lot, parcel, tract,

building, structure and improvement, in accordance with the schedules of

values, standards, and rules, be accurately recorded on the appropriate

property record.

(5) Upon the request of the owner, the board of equalization and review, or the

board of county commissioners, any particular lot, parcel, tract, building,

structure or improvement be actually visited and observed to verify the

accuracy of property characteristics on record for that property.

(6) Each lot, parcel, tract, building, structure and improvement be separately

appraised by a competent appraiser, either one appointed under the provisions

of G.S. 105-296 or one employed under the provisions of G.S. 105-299.

(7) Notice is given in writing to the owner that he is entitled to have an actual

visitation and observation of his property to verify the accuracy of property

characteristics on record for that property.

(c) The values, standards, and rules required by subdivision (b)(1) shall be reviewed and

approved by the board of county commissioners before January 1 of the year they are applied.

The board of county commissioners may approve the schedules of values, standards, and rules to

be used in appraising real property at its true value and at its present-use value either separately


or simultaneously. Notice of the receipt and adoption by the board of county commissioners of

either or both the true value and present-use value schedules, standards, and rules, and notice of a

property owner's right to comment on and contest the schedules, standards, and rules shall be

given as follows:

(1) The assessor shall submit the proposed schedules, standards, and rules to the

board of county commissioners not less than 21 days before the meeting at

which they will be considered by the board. On the same day that they are

submitted to the board for its consideration, the assessor shall file a copy of

the proposed schedules, standards, and rules in his office where they shall

remain available for public inspection.

(2) Upon receipt of the proposed schedules, standards, and rules, the board of

commissioners shall publish a statement in a newspaper having general

circulation in the county stating:

a. That the proposed schedules, standards, and rules to be used in

appraising real property in the county have been submitted to the

board of county commissioners and are available for public inspection

in the assessor's office; and

b. The time and place of a public hearing on the proposed schedules,

standards, and rules that shall be held by the board of county

commissioners at least seven days before adopting the final schedules,

standards, and rules.

(3) When the board of county commissioners approves the final schedules,

standards, and rules, it shall issue an order adopting them. Notice of this order

shall be published once a week for four successive weeks in a newspaper

having general circulation in the county, with the last publication being not

less than seven days before the last day for challenging the validity of the

schedules, standards, and rules by appeal to the Property Tax Commission.

The notice shall state:

a. That the schedules, standards, and rules to be used in the next

scheduled reappraisal of real property in the county have been adopted

and are open to examination in the office of the assessor; and

b. That a property owner who asserts that the schedules, standards, and

rules are invalid may except to the order and appeal therefrom to the

Property Tax Commission within 30 days of the date when the notice

of the order adopting the schedules, standards, and rules was first

published.

(d) Before the board of county commissioners adopts the schedules of values, standards,

and rules, the assessor may collect data needed to apply the schedules, standards, and rules to

each parcel in the county. (1939, c. 310, s. 501; 1959, c. 704, s. 4; 1967, c. 944; 1971, c. 806, s.

1; 1973, c. 476, s. 193; c. 695, s. 5; 1981, c. 224; c. 678, s. 1; 1985, c. 216, s. 2; c. 628, s. 4;

1987, c. 45, s. 1; c. 295, s. 1; 1997-226, s. 5.)

§ 105-317.1. Appraisal of personal property; elements to be considered.

(a) Whenever any personal property is appraised it shall be the duty of the persons

making appraisals to consider the following as to each item (or lot of similar items):

(1) The replacement cost of the property;


(2) The sale price of similar property;

(3) The age of the property;

(4) The physical condition of the property;

(5) The productivity of the property;

(6) The remaining life of the property;

(7) The effect of obsolescence on the property;

(8) The economic utility of the property, that is, its usability and adaptability for

industrial, commercial, or other purposes; and

(9) Any other factor that may affect the value of the property.

(b) In determining the true value of taxable tangible personal property held and used in

connection with the mercantile, manufacturing, producing, processing, or other business

enterprise of any taxpayer, the persons making the appraisal shall consider any information as

reflected by the taxpayer's records and as reported by the taxpayer to the North Carolina

Department of Revenue and to the Internal Revenue Service for income tax purposes, taking into

account the accuracy of the taxpayer's records, the taxpayer's method of accounting, and the level

of trade at which the taxpayer does business.

(c) A taxpayer who owns personal property taxable in the county may appeal the value,

situs, or taxability of the property within 30 days after the date of the initial notice of value. If the

assessor does not give separate written notice of the value to the taxpayer at the taxpayer's last

known address, then the tax bill serves as notice of the value of the personal property. The notice

must contain a statement that the taxpayer may appeal the value, situs, or taxability of the

property within 30 days after the date of the notice. Upon receipt of a timely appeal, the assessor

must arrange a conference with the taxpayer to afford the taxpayer the opportunity to present any

evidence or argument regarding the value, situs, or taxability of the property. Within 30 days

after the conference, the assessor must give written notice to the taxpayer of the assessor's final

decision. Written notice of the decision is not required if the taxpayer signs an agreement

accepting the value, situs, or taxability of the property. If an agreement is not reached, the

taxpayer has 30 days from the date of the notice of the assessor's final decision to request review

of that decision by the board of equalization and review or, if that board is not in session, by the

board of county commissioners. Unless the request for review is given at the conference, it must

be made in writing to the assessor. Upon receipt of a timely request for review, the provisions of

G.S. 105-322 or G.S. 105-325, as appropriate, must be followed. (1971, c. 806, s. 1; 1987, c.

813, s. 15; 2002-156, s. 2.)

§ 105-317.2. Report on transfers of real property.

To facilitate the accurate appraisal of real property for taxation, the information listed in this

section must be included in each deed conveying property. The following information is

required:

(1) The name of each grantor and grantee and the mailing address of each grantor

and grantee.

(2) A statement whether the property includes the primary residence of a grantor.

Failure to comply with this section does not affect the validity of a duly recorded deed. This

section does not apply to deeds of trust, deeds of release, or similar instruments. (2009-454, s.

1.)


Article 20.

Approval, Preparation, Disposition of Records.

§ 105-318. Forms for listing, appraising, and assessing property.

The Department of Revenue may design and prescribe the books and forms to be used

throughout the State in the listing, appraising, and assessing of property for taxation. If the board

exercises the authority granted by the preceding sentence, it is authorized to make arrangements

for the purchase and distribution of approved books and forms through the Division of Purchase

and Contract, the cost thereof to be billed to the counties. If the Department does not exercise the

authority granted by the first sentence of this section, each county and municipality shall submit

the books and forms it proposes to adopt for these purposes to the Department for approval

before they are employed. (1939, c. 310, s. 907; 1971, c. 806, s. 1; 1973, c. 476, s. 193.)

§ 105-319. Tax records; preparation of scroll and tax book.

(a) For each year there shall be prepared for each county and tax-levying municipality a

scroll (showing property valuations) and a tax book (showing the amount of taxes due) or a

combined record (showing both property valuation and taxes due). The governing body of the

county or municipality shall have authority to determine whether the tax records shall be

prepared in combined form or in a separate scroll and tax book. When used in this Subchapter,

the term "tax records" shall mean the scroll, tax book, and combined record. No tax records shall

be adopted by any county or municipality until they have been approved by the Department of

Revenue.

(b) County tax records shall, unless otherwise authorized by the board of county

commissioners, be prepared separately for each township. The tax records of both counties and

municipalities shall, unless otherwise authorized by the unit governing body, be divided into two

parts:

(1) Individual taxpayers (including corporate fiduciaries when, in their fiduciary

capacity, they list the property of individuals).

(2) Corporations, partnerships, other business firms, unincorporated associations,

and all other taxpayers other than individual persons.

(c) The tax records shall show at least the following information:

(1) In alphabetical order, the name of each taxpayer whose property is listed and

assessed for taxation.

(2) The assessment of each taxpayer's real property listed for unit-wide taxation

(divided into as many categories as the Department of Revenue may

prescribe).

(3) The assessment of each taxpayer's personal property listed for unit-wide

taxation (divided into as many categories as the Department of Revenue may

prescribe).

(4) The total assessed value of each taxpayer's real and personal property listed

for unit-wide purposes.

(5) The amount of ad valorem tax due by each taxpayer for unit-wide purposes.

(6) The amount of dog license tax due by each taxpayer.

(7) The total assessed value of each taxpayer's real and personal property listed

for taxation in any special district or subdivision of the unit.

(8) The amount of ad valorem tax due by each taxpayer to any special district or

subdivision of the unit.


(9) The amount of penalties, if any, imposed under the provisions of G.S.

105-312.

(10) The total amount of all taxes and penalties due by each taxpayer to the unit

and to special districts and subdivisions of the unit.

(d) Listings and assessments and any changes therein made during the period between the

close of the regular listing period and the first meeting of the board of equalization and review,

as well as those made during the regular listing period, shall be entered on the county tax

records, and the county tax records shall be submitted to the board of equalization and review at

its first meeting. Additions and changes made by the board of equalization and review shall be

entered on the county tax records in accordance with the provisions of G.S. 105-326. Municipal

corporations shall be governed by the provisions of G.S. 105-326 through 105-328 with regard to

matters dealt with in this subsection (d). (1939, c. 310, s. 1101; 1963, c. 784, s. 1; 1969, c. 1279;

1971, c. 806, s. 1; 1973, c. 476, s. 193.)

§ 105-320. Tax receipts; preparation.

(a) No taxing unit shall adopt a tax receipt form until it has been approved by the

Department of Revenue, and no tax receipt form shall be approved unless it shows at least the

following information:

(1) The name and mailing address of the taxpayer charged with taxes.

(2) The assessment of the taxpayer's real property listed for unit-wide taxation.

(3) The assessment of the taxpayer's personal property listed for unit-wide

taxation.

(4) The total assessed value of the taxpayer's real and personal property listed for

unit-wide taxation.

(5) The total assessed value of the taxpayer's real and personal property listed for

taxation in any special district or subdivision of the unit.

(6) The rate of tax levied for each unit-wide purpose, the total rate levied for all

unit-wide purposes, and the rate levied by or for any special district or

subdivision of the unit in which the taxpayer's property is subject to taxation.

(In lieu of showing this information on the tax receipt, it may be furnished on

a separate sheet of paper, properly identified, at the time the official receipt is

delivered upon payment).

(7) The amount of ad valorem tax due by the taxpayer for unit-wide purposes.

(8) The amount of ad valorem tax due by the taxpayer to any special district or

subdivision of the unit.

(9) The amount of dog license tax due by the taxpayer.

(10) The amount of penalties, if any, imposed under the provisions of G.S.

105-312.

(11) The total amount of all taxes and penalties due by the taxpayer to the unit and

to special districts and subdivisions of the unit.

(12) The amount of discount allowed for prepayment of taxes under the provisions

of G.S. 105-360.

(13) The amount of interest charged for late payment of taxes under the provisions

of G.S. 105-360.


(15) Repealed by 1987 (Regular Session, 1988), c. 1041, s. 1.2.


(16) Repealed by Session Laws 2014-3, s. 14.20(b), effective May 29, 2014.

(b) Instead of being shown on the tax receipt, the information required in subdivision

(16) of subsection (a) may be shown on a separate sheet furnished to the affected taxpayers.

(c) The governing body of the county or municipality shall designate the person or

persons who shall compute and prepare the tax receipt for all taxes charged upon the tax records.

(1939, c. 310, s. 1102; 1961, c. 380; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1985, c. 656, s. 23;

1985 (Reg. Sess., 1986), c. 947, s. 6; 1987, c. 813, ss. 16, 17; 1987 (Reg. Sess., 1988), c. 1041,

ss. 1.2, 1.3; 1991, c. 45, s. 14(c); 2014-3, s. 14.20(b).)

§ 105-321. Disposition of tax records and receipts; order of collection.

(a) County tax records shall be filed in the office of the assessor unless the board of

county commissioners shall require them to be filed in some other public office of the county.

City and town tax records shall be filed in some public office of the municipality designated by

the governing body of the city or town. In the discretion of the governing body, a duplicate copy

of the tax records may be delivered to the tax collector at the time he is charged with the

collection of taxes.

(b) Before delivering the tax receipts to the tax collector in any year, the board of county

commissioners or municipal governing body shall adopt and enter in its minutes an order

directing the tax collector to collect the taxes charged in the tax records and receipts. A copy of

this order shall be delivered to the tax collector at the time the tax receipts are delivered to him,

but the failure to do so shall not affect the tax collector's rights and duties to employ the means of

collecting taxes provided by this Subchapter. The order of collection shall have the force and

effect of a judgment and execution against the taxpayers' real and personal property and shall be

drawn in substantially the following form:

State of North Carolina

County (or City or Town) of ____________________________________________________

To the Tax Collector of the County (or City or Town) of ______________________________

___________________________:

You are hereby authorized, empowered, and commanded to collect the taxes set forth in the

tax records filed in the office of ________________ and in the tax receipts herewith delivered to

you, in the amounts and from the taxpayers likewise therein set forth. Such taxes are hereby

declared to be a first lien upon all real property of the respective taxpayers in the County (or City

or Town) of ________________ , and this order shall be a full and sufficient authority to direct,

require, and enable you to levy on and sell any real or personal property of such taxpayers, for

and on account thereof, in accordance with law.

Witness my hand and official seal, this ____ day of _______________, ______________

__________________________________(Seal)

Chairman, Board of Commissioners of

__________ County

(Mayor, City (or Town) of _________________)

Attest:

___________________________

Clerk of Board of Commissioners of ___________________ County

(Clerk of the City (or Town) of _______________________)

(c) The original tax receipts, together with any duplicate copies that may have been

prepared, shall be delivered to the tax collector by the governing body on or before the first day


of September each year if the tax collector has made settlement as required by G.S. 105-352. The

tax collector shall give his receipt for the tax receipts and duplicates delivered to him for

collection.

(d) Repealed by Session Laws 2006-30, s. 5, effective June 29, 2006.

(e) The governing body of a taxing unit may contract with a bank or other financial

institution for receipt of payment of taxes payable at par and of delinquent taxes and interest for

the current tax year. A financial institution may not issue a receipt for any tax payments received

by it, however. Discount for early payment of taxes shall be allowed by a financial institution

that contracts with a taxing unit pursuant to this subsection to the same extent as allowed by the

tax collector. A financial institution that contracts with a taxing unit for receipt of payment of

taxes shall furnish a bond to the taxing unit conditioned upon faithful performance of the

contract in a form and amount satisfactory to the governing body of the taxing unit. A governing

body of a taxing unit that contracts with a financial institution pursuant to this subsection shall

publish a timely notice of the institution at which taxpayers may pay their taxes in a newspaper

having circulation within the taxing unit. No notice is required, however, if the financial

institution receives payments only through the mail.

(f) Minimal Taxes. – Notwithstanding the provisions of G.S. 105-380, the governing

body of a taxing unit that collects its own taxes may, by resolution, direct its assessor and tax

collector not to collect minimal taxes charged on the tax records and receipts. Minimal taxes are

the combined taxes and fees of the taxing unit and any other units for which it collects taxes, due

on a tax receipt prepared pursuant to G.S. 105-320 in a total original principal amount that does

not exceed an amount, up to five dollars ($5.00), set by the governing body. The amount set by

the governing body should be the estimated cost to the taxing unit of billing the taxpayer for the

amounts due on a tax receipt or tax notice. Upon adoption of a resolution pursuant to this

subsection, the tax collector shall not bill the taxpayer for, or otherwise collect, minimal taxes

but shall keep a record of all minimal taxes by receipt number and amount and shall make a

report of the amount of these taxes to the governing body at the time of the settlement. These

minimal taxes shall not be a lien on the taxpayer's real property and shall not be collectible under

Article 26 of this Subchapter. A resolution adopted pursuant to this subsection must be adopted

on or before June 15 preceding the first taxable year to which it applies and remains in effect

until amended or repealed by resolution of the taxing unit. A resolution adopted pursuant to this

subsection shall not apply to taxes on registered motor vehicles.

(g) Minimal Refunds. – The governing body of a taxing unit that collects its own taxes

may, by resolution, direct the taxing unit not to mail a refund for an overpayment of tax if the

refund is less than fifteen dollars ($15.00). Upon adoption of a resolution pursuant to this

subsection, the taxing unit shall keep a record of all minimal refunds by receipt number and

amount and shall make a report of the amount of these refunds to the governing body at the time

of the settlement and shall implement a system by which payment of the refund may be made to

a taxpayer who comes into the office of the taxing unit seeking the refund. Unless the taxpayer

requests the minimal refund in person at the office of the taxing unit before the end of the fiscal

year in which the refund is due, the taxing unit must implement a system to apply the minimal

refund as a credit against the tax liability of the taxpayer for taxes due to the taxing unit for the

next succeeding year. An overpayment of tax bears interest at the rate set under G.S. 105-241.21

from the date the interest begins to accrue until a refund is paid or applied in accordance with

this section. Interest accrues from the later of the date the tax was paid and the date the tax would

have been considered delinquent under G.S. 105-360. A resolution adopted pursuant to this


subsection must be adopted on or before June 15 preceding the first taxable year to which it

applies and remains in effect until amended or repealed by resolution of the taxing unit. (1939,

c. 310, s. 1103; 1971, c. 806, s. 1; 1973, c. 476, s. 193; c. 615; 1987, c. 45, s. 1; 1989, c. 578, s.

1; 1991, c. 584, s. 1; 1995, c. 24, s. 1; c. 329, ss. 1, 2; 1999-456, s. 59; 2006-30, s. 5; 2012-79, s.

3.1; 2015-266, s. 2.)

Article 21.

Review and Appeals of Listings and Valuations.

§ 105-322. County board of equalization and review.

(a) Personnel. – Except as otherwise provided herein, the board of equalization and

review of each county shall be composed of the members of the board of county commissioners.

Upon the adoption of a resolution so providing, the board of commissioners is authorized to

appoint a special board of equalization and review to carry out the duties imposed under this

section. The resolution shall provide for the membership, qualifications, terms of office and the

filling of vacancies on the board. The board of commissioners shall also designate the chairman

of the special board. The resolution may also authorize a taxpayer to appeal a decision of the

special board with respect to the listing or appraisal of his property or the property of others to

the board of county commissioners. The resolution shall be adopted not later than the first

Monday in March of the year for which it is to be effective and shall continue in effect until

revised or rescinded. It shall be entered in the minutes of the meeting of the board of

commissioners and a copy thereof shall be forwarded to the Department of Revenue within 15

days after its adoption.

Nothing in this subsection (a) shall be construed as repealing any law creating a special board

of equalization and review or creating any board charged with the duties of a board of

equalization and review in any county.

(b) Compensation. – The board of county commissioners shall fix the compensation and

allowances to be paid members of the board of equalization and review for their services and

expenses.

(c) Oath. – Each member of the board of equalization and review shall take the oath

required by Article VI, § 7 of the North Carolina Constitution with the following phrase added to

it: "that I will not allow my actions as a member of the board of equalization and review to be

influenced by personal or political friendships or obligations,". The oath must be filed with the

clerk of the board of county commissioners.

(d) Clerk and Minutes. – The assessor shall serve as clerk to the board of equalization

and review, shall be present at all meetings, shall maintain accurate minutes of the actions of the

board, and shall give to the board such information as he may have or can obtain with respect to

the listing and valuation of taxable property in the county.

(e) Time of Meeting. – Each year the board of equalization and review shall hold its first

meeting not earlier than the first Monday in April and not later than the first Monday in May. In

years in which a county does not conduct a real property revaluation, the board shall complete its

duties on or before the third Monday following its first meeting unless, in its opinion, a longer

period of time is necessary or expedient to a proper execution of its responsibilities. Except as

provided in subdivision (g)(5) of this section, the board may not sit later than July 1 except to

hear and determine requests made under the provisions of subdivision (g)(2), below, when such

requests are made within the time prescribed by law. In the year in which a county conducts a


real property revaluation, the board shall complete its duties on or before December 1, except

that it may sit after that date to hear and determine requests made under the provisions of

subdivision (g)(2), below, when such requests are made within the time prescribed by law. From

the time of its first meeting until its adjournment, the board shall meet at such times as it deems

reasonably necessary to perform its statutory duties and to receive requests and hear the appeals

of taxpayers under the provisions of subdivision (g)(2), below.

(f) Notice of Meetings and Adjournment. – A notice of the date, hours, place, and

purpose of the first meeting of the board of equalization and review shall be published at least

three times in some newspaper having general circulation in the county, the first publication to

be at least 10 days prior to the first meeting. The notice shall also state the dates and hours on

which the board will meet following its first meeting and the date on which it expects to adjourn;

it shall also carry a statement that in the event of earlier or later adjournment, notice to that effect

will be published in the same newspaper. Should a notice be required on account of earlier

adjournment, it shall be published at least once in the newspaper in which the first notice was

published, such publication to be at least five days prior to the date fixed for adjournment.

Should a notice be required on account of later adjournment, it shall be published at least once in

the newspaper in which the first notice was published, such publication to be prior to the date

first announced for adjournment.

(g) Powers and Duties. – The board of equalization and review has the following powers

and duties:

(1) Duty to Review Tax Lists. – The board shall examine and review the tax lists

of the county for the current year to the end that all taxable property shall be

listed on the abstracts and tax records of the county and appraised according

to the standard required by G.S. 105-283, and the board shall correct the

abstracts and tax records to conform to the provisions of this Subchapter. In

carrying out its responsibilities under this subdivision (g)(1), the board, on its

own motion or on sufficient cause shown by any person, shall:

a. List, appraise, and assess any taxable real or personal property that has

been omitted from the tax lists.

b. Correct all errors in the names of persons and in the description of

properties subject to taxation.

c. Increase or reduce the appraised value of any property that, in the

board's opinion, has been listed and appraised at a figure that is below

or above the appraisal required by G.S. 105-283; however, the board

shall not change the appraised value of any real property from that at

which it was appraised for the preceding year except in accordance

with the terms of G.S. 105-286 and 105-287.

d. Cause to be done whatever else is necessary to make the lists and tax

records comply with the provisions of this Subchapter.

e. Embody actions taken under the provisions of subdivisions (g)(1)a

through (g)(1)d, above, in appropriate orders and have the orders

entered in the minutes of the board.

f. Give written notice to the taxpayer at the taxpayer's last known address

in the event the board, by appropriate order, increases the appraisal of

any property or lists for taxation any property omitted from the tax

lists under the provisions of this subdivision (g)(1).


(2) Duty to Hear Taxpayer Appeals. – On request, the board of equalization and

review shall hear any taxpayer who owns or controls property taxable in the

county with respect to the listing or appraisal of the taxpayer's property or the

property of others.

a. A request for a hearing under this subdivision (g)(2) shall be made in

writing to or by personal appearance before the board prior to its

adjournment. However, if the taxpayer requests review of a decision

made by the board under the provisions of subdivision (g)(1), above,

notice of which was mailed fewer than 15 days prior to the board's

adjournment, the request for a hearing thereon may be made within 15

days after the notice of the board's decision was mailed.

b. Taxpayers may file separate or joint requests for hearings under the

provisions of this subdivision (g)(2) at their election.

c. At a hearing under provisions of this subdivision (g)(2), the board, in

addition to the powers it may exercise under the provisions of

subdivision (g)(3), below, shall hear any evidence offered by the

appellant, the assessor, and other county officials that is pertinent to

the decision of the appeal. Upon the request of an appellant, the board

shall subpoena witnesses or documents if there is a reasonable basis

for believing that the witnesses have or the documents contain

information pertinent to the decision of the appeal.

d. On the basis of its decision after any hearing conducted under this

subdivision (g)(2), the board shall adopt and have entered in its

minutes an order reducing, increasing, or confirming the appraisal

appealed or listing or removing from the tax lists the property whose

omission or listing has been appealed. The board shall notify the

appellant by mail as to the action taken on the taxpayer's appeal not

later than 30 days after the board's adjournment.

(3) Powers in Carrying Out Duties. – In the performance of its duties under

subdivisions (g)(1) and (g)(2), above, the board of equalization and review

may exercise the following powers:

a. It may appoint committees composed of its own members or other

persons to assist it in making investigations necessary to its work. It

may also employ expert appraisers in its discretion. The expense of the

employment of committees or appraisers shall be borne by the county.

The board may, in its discretion, require the taxpayer to reimburse the

county for the cost of any appraisal by experts demanded by the

taxpayer if the appraisal does not result in material reduction of the

valuation of the property appraised and if the appraisal is not

subsequently reduced materially by the board or by the Department of

Revenue.

b. The board, in its discretion, may examine any witnesses and

documents. It may place any witnesses under oath administered by any

member of the board. It may subpoena witnesses or documents on its

own motion, and it must do so when a request is made under the

provisions of subdivision (g)(2)c, above.


A subpoena issued by the board shall be signed by the chair of the

board, directed to the witness or to the person having custody of the

document, and served by an officer authorized to serve subpoenas.

Any person who willfully fails to appear or to produce documents in

response to a subpoena or to testify when appearing in response to a

subpoena shall be guilty of a Class 1 misdemeanor.

(4) Power to Submit Reports. – Upon the completion of its other duties, the board

may submit to the Department of Revenue a report outlining the quality of the

reappraisal, any problems it encountered in the reappraisal process, the

number of appeals submitted to the board and to the Property Tax

Commission, the success rate of the appeals submitted, and the name of the

firm that conducted the reappraisal. A copy of the report should be sent by the

board to the firm that conducted the reappraisal.

(5) Duty to Change Abstracts and Records After Adjournment. – Following

adjournment upon completion of its duties under subdivisions (g)(1) and

(g)(2) of this subsection, the board may continue to meet to carry out the

following duties:

a. To hear and decide all appeals relating to discovered property under

G.S. 105-312(d) and (k).

b. To hear and decide all appeals relating to the appraisal, situs, and

taxability of classified motor vehicles under G.S. 105-330.2(b).

c. To hear and decide all appeals relating to audits conducted under G.S.

105-296(j) and relating to audits conducted under G.S. 105-296(j) and

(l) of property classified at present-use value and property exempted or

excluded from taxation.

d. To hear and decide all appeals relating to personal property under G.S.

105-317.1(c). (1939, c. 310, s. 1105; 1965, c. 191; 1967, c. 1196, s. 6;

1971, c. 806, s. 1; 1973, c. 476, s. 193; 1977, c. 863; 1987, c. 45, s. 1;

1989, c. 79, s. 3; c. 176, s. 1; c. 196; 1991, c. 110, s. 5; 1991 (Reg.

Sess., 1992), c. 1007, s. 22; 1993, c. 539, s. 720; 1994, Ex. Sess., c. 24,

s. 14(c); 2001-139, ss. 6, 7; 2002-156, s. 3.)

§ 105-323. Giving effect to decisions of the board of equalization and review.

All changes in listings, names, descriptions, appraisals, and assessments made by the board

of equalization and review shall be reflected upon the abstracts and tax records by insertion of

rebates given, additional charges made, or any other insertion; by correction; or by any other

charge. The tax records shall then be totalled, and at least a majority of the members of the board

of equalization and review shall sign the following statement to be inserted at the end of the tax

records:

State of North Carolina

County of _____________________________________________________________________

We, the undersigned members of the Board of Equalization and Review of ________

County, hereby certify that these tax records constitute the fixed and permanent tax list and

assessment roll and record of taxes due for the year ______, subject to only such changes as may

be allowed by law.


___________________________________________________________________

___________________________________________________________________

Members of the Board of Equalization

and Review of ______________ County

The omission of this endorsement shall not affect the validity of the tax records or of any taxes

levied on the basis of the assessments appearing in them. (1939, c. 310, s. 1106; 1971, c. 806, s.

1; 1999-456, s. 59.)


§ 105-325. Powers of board of county commissioners to change abstracts and tax records

after board of equalization and review has adjourned.

(a) After the board of equalization and review has finished its work and the changes it

effected or ordered have been entered on the abstracts and tax records as required by G.S.

105-323, the board of county commissioners shall not authorize any changes to be made on the

abstracts and tax records except as follows:

(1) To give effect to decisions of the Property Tax Commission on appeals taken

under G.S. 105-290.

(2) To add to the tax records any valuation certified by the Department of

Revenue for property appraised in the first instance by the Department or to

give effect to corrections made in such appraisals by the Department.

(3) Subject to the provisions of subdivisions (a)(3)a and (a)(3)b, below, to correct

the name of any taxpayer appearing on the abstract or tax records erroneously;

to substitute the name of the person who should have listed property for the

name appearing on the abstract or tax records as having listed the property;

and to correct an erroneous description of any property appearing on the

abstract or tax records.

a. Any correction or substitution made under the provisions of this

subdivision (a)(3) shall have the same force and effect as if the name

of the taxpayer or description of the property had been correctly listed

in the first instance, but the provisions of this subdivision (a)(3)a shall

not be construed as a limitation on the taxation and penalization of

discovered property required by G.S. 105-312.

b. If a correction or substitution under this subdivision (a)(3) will

adversely affect the interests of any taxpayer, he shall be given written

notice thereof and an opportunity to be heard before the change is

entered on the abstract or tax records.

(4) To correct appraisals, assessments, and amounts of taxes appearing

erroneously on the abstracts or tax records as the result of clerical or

mathematical errors. (If the clerical or mathematical error was made by the

taxpayer, his agent, or an officer of the taxpayer and if the correction

demonstrates that the property was listed at a substantial understatement of

value, quantity, or other measurement, the provisions of G.S. 105-312 shall

apply.)


(5) To add to the tax records and abstracts or to correct the tax records and

abstracts to include property discovered under the provisions of G.S. 105-312

or property exempted or excluded from taxation pursuant to G.S.

105-282.1(a)(4).

(6) Subject to the provisions of subdivisions (a)(6)a, (a)(6)b, (a)(6)c, and (a)(6)d,

below, to appraise or reappraise property when the assessor reports to the

board that, since adjournment of the board of equalization and review, facts

have come to his attention that render it advisable to raise or lower the

appraisal of some particular property of a given taxpayer in the then current

calendar year.

a. The power granted by this subdivision (a)(6) shall not authorize

appraisal or reappraisal because of events or circumstances that have

taken place or arisen since the day as of which property is to be listed.

b. No appraisal or reappraisal shall be made under the authority of this

subdivision (a)(6) unless it could have been made by the board of

equalization and review had the same facts been brought to the

attention of that board.

c. If a reappraisal made under the provisions of this subdivision (a)(6)

demonstrates that the property was listed at a substantial

understatement of value, quantity, or other measurement, the

provisions of G.S. 105-312 shall apply.

d. If an appraisal or reappraisal made under the provisions of this

subdivision (a)(6) will adversely affect the interests of any taxpayer,

he shall be given written notice thereof and an opportunity to be heard

before the appraisal or reappraisal shall become final.

(7) To give effect to decisions of the board of county commissioners on appeals

taken under G.S. 105-322(a).

(b) The board of county commissioners may give the assessor general authority to make

any changes authorized by subsection (a), above, except those permitted under subdivision

(a)(6), above.

(c) Orders of the board of county commissioners and actions of the assessor upon

delegation of authority to him by the board that are made under the provisions of this section

may be appealed to the Property Tax Commission under the provisions of G.S. 105-290. (1939,

c. 310, s. 1108; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1987, c. 45, s. 1, c. 295, s, 8, c. 680, s. 6;

1989, c. 176, s. 2.)

§ 105-325.1. Special committee for motor vehicle appeals.

The board of county commissioners may appoint a special committee of its members or other

persons to hear and decide appeals arising under G.S. 105-330.2(b). The county shall bear the

expense of employing the committee. (1991 (Reg. Sess., 1992), c. 961, s. 9.)

Article 22.

Listing, Appraising, and Assessing by Cities and Towns.

§ 105-326. Listing property for city and town taxation; duty of owner; authority of

governing body to obtain lists from county.


(a) All property subject to ad valorem taxation in any city or town shall be listed annually

during the period prescribed by G.S. 105-307 in the city or town in which it is taxable in the

name of the person required by G.S. 105-302 and 105-306 on an abstract prepared according to

G.S. 105-309 and affirmed as required by G.S. 105-310. In lieu of requiring property owners to

list their property with the city or town, the governing body of any city or town may make

provision for obtaining from the abstracts and tax records of the county in which the

municipality is situated lists of the property subject to taxation by the city or town.

(b) Regardless of whether a city or town adopts the alternative provided in the second

sentence of subsection (a), above, the provisions of G.S. 105-311 and 105-312 shall apply to the

listing of property for municipal taxation, as shall the penalties imposed by G.S. 105-308 and

105-312 for failure to list. In the preparation of abstracts, tax records, and tax receipts the city or

town shall be governed by the provisions of G.S. 105-318, 105-319, 105-320, and 105-321. The

powers and duties assigned to the assessor by the statutes cited as being applicable to

municipalities shall be imposed upon and exercised by some official designated by the

governing body of the city or town, and the powers and duties assigned therein to the board of

county commissioners shall be imposed upon and exercised by the governing body of the city or

town. (1939, c. 310, s. 1201; 1971, c. 806, s. 1; 1987, c. 45, s. 1.)

§ 105-327. Appraisal and assessment of property subject to city and town taxation.

For the property it is entitled to tax, a city or town situated in a single county shall accept and

adopt the appraisals and assessments fixed by the authorities of that county as modified by the

Department of Revenue under the provisions of this Subchapter. However, the requirement of

this section shall not be construed to modify the appraisal and assessment authority given cities

and towns with respect to discovered property by G.S. 105-312. (1939, c. 310, s. 1201; 1971, c.

806, s. 1; 1973, c. 476, s. 193.)

§ 105-328. Listing, appraisal, and assessment of property subject to taxation by cities and

towns situated in more than one county.

(a) For purposes of municipal taxation, all property subject to taxation by a city or town

situated in two or more counties may, by resolution of the governing body of the municipality, be

listed, appraised, and assessed as provided in G.S. 105-326 and 105-327 if, in such a case, in the

opinion of the governing body, the same appraisal and assessment standards will thereby apply

uniformly throughout the municipality. However, if, in such a case, the governing body shall

determine that adoption of the appraisals and assessments fixed by the counties will not result in

uniform appraisals and assessments throughout the municipality, the governing body may, by

horizontal adjustments, equalize the appraisal and assessment values fixed by the counties in

order to obtain the required uniformity. Taxes levied by the city or town shall be levied

uniformly on the assessments so determined.

(b) Should the governing body of a city or town situated in two or more counties not

adopt the procedure provided in subsection (a), above, all property subject to taxation by the

municipality shall be listed, appraised, and assessed as provided in subdivisions (b)(1) through

(b)(6), below.

(1) The governing body of the city or town shall appoint a municipal assessor on

or before the first Monday in July in each odd-numbered year. The governing

body may remove the municipal assessor from office during his term for good

cause after giving him notice in writing and an opportunity to appear and be


heard at a public session of the appointing body. Whenever a vacancy occurs

in the office, the governing body shall appoint a qualified person to serve as

municipal assessor for the period of the unexpired term. A person appointed

as a municipal assessor shall meet the qualifications and requirements set for a

county assessor under G.S. 105-294. Pursuant to Article VI, Sec. 9, of North

Carolina Constitution, the office of municipal assessor is hereby declared to

be an office that may be held concurrently with any other appointive office.

(2) With the approval of the governing body, a municipal assessor may employ

listers, appraisers, and clerical assistants necessary to carry out the listing,

appraisal, assessing, and billing functions required by law.

(3) A municipal assessor and the persons employed by him have the same powers

and duties as their county equivalents with respect to property subject to

taxation by a city or town.

(4) The governing body shall, with respect to property subject to city or town

taxation, be vested with the powers and duties vested by this Subchapter in

boards of county commissioners and boards of equalization and review.

Appeals may be taken from the municipal board of equalization and review or

governing body to the Property Tax Commission in the manner provided in

this Subchapter for appeals from county boards of equalization and review

and boards of county commissioners.

(5) All expenses incident to the listing, appraisal, and assessment of property for

the purpose of city or town taxation shall be borne by the municipality for

whose benefit the work is undertaken.

(6) The intent of this subsection (b) is to provide cities and towns that are situated

in two or more counties with machinery for listing, appraising, and assessing

property for municipal taxation equivalent to that established by this

Subchapter for counties. The powers to be exercised by, the duties imposed

on, and the possible penalties against municipal governing bodies, boards of

equalization and review, assessors, and persons employed by an assessor shall

be the same as those provided in this Subchapter by, on, or against county

boards of commissioners, boards of equalization and review, assessors, and

persons employed by an assessor. (1939, c. 310, s. 1202; 1971, c. 806, s. 1;

1973, c. 476, s. 193; c. 695, s. 13; 1987, c. 43, s. 8; c. 45, s .1; c. 46, s. 2.)


Article 22A.

Motor Vehicles.



(1) Classified motor vehicle. – A motor vehicle classified under this Article.

(1a) Collecting authority. – The Division of Motor Vehicles or an agent

contracting with the Division of Motor Vehicles.

(2) Motor vehicle. – Defined in G.S. 20-4.01(23).

(2a) Municipal corporation. – Defined in G.S. 105-273(11).


(3) Public service company. – Defined in G.S. 105-333(14).

(4) Registered classified motor vehicle. – Any of the following:

a. A classified motor vehicle that has a registration plate issued under

Article 3 of Chapter 20 of the General Statutes and whose registration

is current.

b. A classified motor vehicle transferred to an owner who has applied for

a registration plate for the motor vehicle.

(5) Registration fees. – Fees set out in G.S. 20-87 and G.S. 20-88.

(6) Unregistered classified motor vehicle. – A classified motor vehicle that is not

a registered classified motor vehicle. (1991, c. 624, s. 1; 2005-294, s. 1;

2006-259, s. 31.5; 2007-527, s. 22(b); 2008-134, s. 65; 2009-445, s. 24(a);

2010-95, s. 22(c); 2011-330, s. 42(a); 2012-79, s. 3.6; 2013-414, s. 70(b), (d).)

§ 105-330.1. Classification of motor vehicles.

(a) Classification. – All motor vehicles other than the motor vehicles listed in subsection

(b) of this section are designated a special class of property under Article V, Sec. 2(2) of the

North Carolina Constitution and are considered classified motor vehicles. Classified motor

vehicles must be listed and assessed as provided in this Article and taxes on classified motor

vehicles must be collected as provided in this Article.

(b) Exceptions. – The following motor vehicles are not classified under subsection (a) of

this section:

(1) Motor vehicles exempt from registration pursuant to G.S. 20-51.

(2) Manufactured homes, mobile classrooms, and mobile offices.

(3) Semitrailers or trailers registered on a multiyear basis.

(4) Motor vehicles owned or leased by a public service company and appraised

under G.S. 105-335.

(5) Repealed by Session Laws 2000, c. 140, s. 75(a), effective July 1, 2000.

(6) Motor vehicles registered under the International Registration Plan.

(7) Motor vehicles issued permanent registration plates under G.S. 20-84.

(8) Self-propelled property-carrying vehicles issued three-month registration

plates at the farmer rate under G.S. 20-88.

(9) Motor vehicles owned by participants in the Address Confidentiality Program

authorized under Chapter 15C of the General Statutes. (1991, c. 624, s. 1;

1991 (Reg. Sess., 1992), c. 961, s. 3; 1993, c. 485, s. 18; c. 543, s. 4; 1993

(Reg. Sess., 1994), c. 745, s. 1; 2000-140, s. 75(a); 2007-471, s. 6; 2009-445,

ss. 24(a), 25(a); 2010-95, s. 22(c), (d); 2013-414, ss. 70(b), (c), 72.)

§ 105-330.2. Appraisal, ownership, and situs.

(a) Determination Date for Registered Vehicle. – The ownership, situs, and taxability of

a registered classified motor vehicle is determined annually as of the date on which the vehicle's

current registration is renewed, regardless of whether the registration is renewed after it has

expired, or on the date an application for a new registration is submitted. The situs of a registered

classified motor vehicle may not be changed until the next registration date. The value of a

registered classified motor vehicle is determined as follows:


(1) For a registration expiring or an application for a new registration during the

period January 1 through August 31, the value is determined as of January 1

of the current year.

(2) For a registration expiring or an application for a new registration during the

period September 1 through December 31, the value is determined as of

January 1 of the following year.

(3) For a new motor vehicle whose value cannot be determined as of January 1 of

the year specified in subdivision (1) or (2) of this subsection, the value is

determined as of the date that model of motor vehicle is first offered for sale

at retail in this State.

(4) For a motor vehicle whose value cannot be determined as of the date set under

any other subdivision in this subsection, the value is determined using the

most currently available January 1 retail value of the vehicle.

(a1) Determination Date for Unregistered Vehicle. – The ownership, situs, and taxability

of an unregistered classified motor vehicle is determined as of January 1 of the year in which the

registration of the motor vehicle expires and is not renewed or the motor vehicle is acquired and

the owner does not submit an application for registration. The value of an unregistered classified

motor vehicle is determined as of January 1 of the year the vehicle is required to be listed.

(b) Value. – An assessor must appraise a classified motor vehicle at its true value in

money as prescribed by G.S. 105-283. The sales price of a classified motor vehicle purchased

from a dealer, including all accessories attached to the vehicle when it is delivered to the

purchaser, is considered the true value of the vehicle, and the assessor must appraise the vehicle

at this value. The sales price excludes the tax imposed under Article 5A of this Chapter. The

Property Tax Division of the Department of Revenue must annually adopt a schedule of values,

standards, and rules to be used in the valuation of all other classified motor vehicles to ensure

equitable statewide valuations, taking into account local market conditions and allowing

adjustments for mileage and the condition of the vehicles.

(b1) Valuation Appeal. – The owner of a classified motor vehicle may appeal the

appraised value of the vehicle by filing a request for appeal with the assessor within 30 days of

the date taxes are due on the vehicle under G.S. 105-330.4. An owner who appeals the appraised

value of a classified motor vehicle must pay the tax on the vehicle when due, subject to a full or

partial refund if the appeal is decided in the owner's favor.

The combined tax and registration notice or tax receipt for a classified motor vehicle must

explain the right to appeal the appraised value of the vehicle. A lessee of a vehicle that is

required by the terms of the lease to pay the tax on the vehicle is considered the owner of the

vehicle for purposes of filing an appeal under this subsection. Appeals filed under this subsection

shall proceed in the manner provided in G.S. 105-312(d).

(b2) Exemption or Exclusion Appeal. – The owner of a classified motor vehicle may

appeal the vehicle's eligibility for an exemption or exclusion by filing a request for appeal with

the assessor within 30 days of the assessor's initial decision on the exemption or exclusion

application filed by the owner pursuant to G.S. 105-330.3(b). Appeals filed under this subsection

shall proceed in the manner provided in G.S. 105-312(d).

(c) Repealed by Session Laws 2008-134, s. 61, effective July 28, 2008. (1991, c. 624, s.


1997-6, s. 10; 1999-353, s. 1; 2005-294, s. 2; 2005-303, s. 1; 2006-259, s. 31.5; 2007-527, s.


22(b); 2008-134, ss. 61, 65; 2009-445, s. 24(a); 2010-95, s. 22(c); 2011-330, s. 42(a); 2012-79,

ss. 3.2, 3.6; 2013-414, ss. 70(b), (d), 71(a), (b).)

§ 105-330.3. Listing requirements for classified motor vehicles; application for exempt

status.

(a1) Unregistered Vehicles. – The owner of an unregistered classified motor vehicle must

list the vehicle for taxes by filing an abstract with the assessor of the county in which the vehicle

is located on or before January 31 following the date the owner acquired the unregistered vehicle

or, in the case of a registration that is not renewed, January 31 following the date the registration

expires, and on or before January 31 of each succeeding year that the vehicle is unregistered. If a

classified motor vehicle required to be listed pursuant to this subsection is registered before the

end of the fiscal year for which it was required to be listed, the following applies:

(1) The vehicle is taxed as a registered vehicle, and the tax assessed pursuant to

this subsection for the fiscal year in which the vehicle was required to be

listed shall be released and/or refunded.

(2) For any months for which the vehicle was not taxed between the date the

registration expired and the start of the current registered vehicle tax year, the

vehicle is taxed as an unregistered vehicle as follows:

a. The value of the motor vehicle is determined as of January 1 of the

year in which the registration of the motor vehicle expires.

b. In computing the taxes, the assessor must use the tax rates and any

additional motor vehicle taxes of the various taxing units in effect on

the date the taxes are computed.

c. The tax on the motor vehicle is the product of a fraction and the

number of months for which the vehicle was not taxed between the

date the registration expires and the start of the current registered

vehicle tax year. The numerator of the fraction is the product of the

appraised value of the motor vehicle and the tax rate of the various

taxing units. The denominator of the fraction is 12.

d. The taxes are due on the first day of the second month following the

month the notice was prepared.

e. Interest accrues on unpaid taxes for these unregistered classified motor

vehicles at the rate of five percent (5%) for the remainder of the month

following the month the taxes are due. Interest accrues at the rate of

three-fourths percent (3/4%) for each following month until the taxes

are paid, unless the notice is prepared after the date the taxes are due.

In that circumstance, the interest accrues beginning the second month

following the date of the notice until the taxes are paid.

(3) A vehicle required to be listed pursuant to this subsection that is not listed by

January 31 and is not registered before the end of the fiscal year for which it

was required to be listed is subject to discovery pursuant to G.S. 105-312.

(b) Exemption or Exclusion. – The owner of a classified motor vehicle who claims an

exemption or exclusion from tax under this Subchapter has the burden of establishing that the

vehicle is entitled to the exemption or exclusion. The owner may establish prima facie

entitlement to exemption or exclusion of the classified motor vehicle by filing an application for

exempt status with the assessor within 30 days of the date taxes on the vehicle are due. When an


approved application is on file, the assessor must omit from the tax records the classified motor

vehicles described in the application. An application is not required for vehicles qualifying for

the exemptions or exclusions listed in G.S. 105-282.1(a)(1). The remaining provisions of G.S.

105-282.1 do not apply to classified motor vehicles.

(c) Duty to report changes. – The owner of a classified motor vehicle that has been

omitted from the tax records as provided in subsection (b) of this section must report to the

assessor any classified motor vehicle registered in the owner's name or owned by that person but

not registered in the person's name that does not qualify for exemption or exclusion for the

current year. This report must be made within 30 days after the renewal of registration or initial

registration of the vehicle or, for an unregistered vehicle, on or before January 31 of the year in

which the vehicle is required to be listed by subsection (a1) of this section. A classified motor

vehicle that does not qualify for exemption or exclusion but has been omitted from the tax

records as provided in subsection (b) is subject to discovery under the provisions of G.S.

105-312, except that in lieu of the penalties prescribed by G.S. 105-312(h) a penalty of one

hundred dollars ($100.00) is assessed for each registration period that elapsed before the

disqualification was discovered.

(d) Criminal Sanction. – A person who willfully attempts, or who willfully aids or abets

another person to attempt, in any manner to evade or defeat the taxes subject to this Article,

whether by removal or concealment of property or otherwise, is guilty of a Class 2 misdemeanor.

(1991, c. 624, s. 1; 2008-134, s. 62; 2009-445, s. 24(a); 2010-95, s. 22(c); 2012-79, s. 3.3;

2013-414, ss. 70(b), 71(a), (c).)

§ 105-330.4. Due date, interest, and enforcement remedies.

(a) Due Date. – The registration of a classified motor vehicle may not be issued unless a

temporary registration plate is issued for the motor vehicle under G.S. 20-79.1A or the taxes for

the motor vehicle's tax year that begins after the issuance of the registration are paid upon

registration. A registration of a classified motor vehicle may not be renewed unless the taxes for

the motor vehicle's tax year that begins after the registration expires are paid upon registration. If

the registration of a classified motor vehicle is renewed earlier than the date the taxes are due, the

taxes must be paid as if they were due. Taxes on a classified motor vehicle are due as follows:

(1) For an unregistered classified motor vehicle, the taxes are due on September 1

following the date by which the vehicle was required to be listed.

(2) For a registered classified motor vehicle that is registered under the staggered

system, the taxes are due each year on the date the owner applies for a new

registration or the fifteenth day of the month following the month in which the

registration renewal sticker expires pursuant to G.S. 20-66(g).

(3) For a registered classified motor vehicle that is registered under the annual

system, taxes are due on the date the owner applies for a new registration or

45 days after the registration expires.

(4) For a registered classified motor vehicle that has a temporary registration plate

issued under G.S. 20-79.1 or a limited registration plate issued under G.S.

20-79.1A, the taxes are due on the last day of the second month following the

date the owner applied for the plate.

(a1) Repealed by Session Laws 2009-445, s. 24(a), effective July 1, 2013, and applicable

to combined tax and registration notices issued on or after that date.


(b) Interest. – Interest accrues on unpaid taxes and unpaid registration fees for registered

classified motor vehicles at the rate of five percent (5%) for the remainder of the month the taxes

are due under subsection (a) of this section. Interest does not accrue for the first month following

the due date. Interest accrues at the rate of three-fourths percent (3/4%) beginning the second

month following the due date and for each following month until the taxes and fees are paid.

Subject to the provisions of G.S. 105-395.1, interest accrues on delinquent taxes on unregistered

classified motor vehicles as provided in G.S. 105-360(a) and the discounts allowed in G.S.

105-360(a) apply to the payment of the taxes.

(c) Remedies. – The enforcement remedies in this Subchapter apply to unpaid taxes on

an unregistered classified motor vehicle and to unpaid taxes on a registered classified motor

vehicle for which the tax year begins before October 1, 2013.

(d) Payments. – Tax payments submitted by mail are deemed to be received as of the date

shown on the postmark affixed by the United States Postal Service. If no date is shown on the

postmark or if the postmark is not affixed by the United States Postal Service, the tax payment is

deemed to be received when the payment is received by the collecting authority. In any dispute

arising under this subsection, the burden of proof is on the taxpayer to show that the payment

was timely made.

(e) Waiver. – Notwithstanding G.S. 105-380, the governing board of a county may adopt

a resolution to create a uniform policy to allow the reduction or waiver of interest or penalties on

delinquent motor vehicle taxes for registered classified motor vehicles for tax years prior to July

1, 2013. (1991, c. 624, s. 1; 1991 (Reg. Sess., 1992), c. 961, s. 5; 1995, c. 510, s. 2; 2001-139, s.

8; 2005-294, ss. 3, 4, 5; 2006-259, s. 31.5; 2007-471, s. 3; 2007-527, s. 22(b); 2008-134, s. 65;

2009-445, ss. 24(a), 25(a); 2010-95, s. 22(c), (d); 2011-330, ss. 40, 42(a); 2012-79, ss. 3.4, 3.6;

2013-414, ss. 70(b)-(d), 71(a), (d); 2015-204, s. 1.)

§ 105-330.5. Notice required; distribution and collection fees.

(a) Notice for Registered Vehicle. – The Property Tax Division of the Department of

Revenue or a third-party contractor selected by the Property Tax Division must prepare a

combined tax and registration notice for each registered classified motor vehicle. The combined

tax and registration notice must contain all county and municipal corporation taxes and fees due

on the motor vehicle as computed by the assessor in the county of registration. If the motor

vehicle has a temporary or limited registration plate issued under G.S. 20-79.1 or G.S. 20-79.1A,

the combined tax and registration notice must state that the vehicle registration fees for the plate

have been paid and that the vehicle's registration becomes valid for the remainder of the year

upon payment of the county and municipal corporation taxes and fees that are due. A combined

tax and registration notice that sets out the required information on a vehicle issued a limited

registration plate constitutes the registration certificate for that vehicle.

In computing the taxes, the assessor must appraise the motor vehicle in accordance with G.S.

105-330.2 and must use the tax rates and any additional motor vehicle taxes of the various taxing

units in effect on the date the taxes are computed. The tax on the motor vehicle is the product of

a fraction and the number of months in the motor vehicle tax year. The numerator of the fraction

is the product of the appraised value of the motor vehicle and the tax rate of the various taxing

units. The denominator of the fraction is 12. This procedure constitutes the listing and

assessment of each classified motor vehicle for taxation.

The combined tax and registration notice must contain the following:

(1) The appraised value of the motor vehicle.


(2) The tax rate of each taxing unit.

(3) A statement that the appraised value and the taxability of the motor vehicle

may be appealed to the assessor in writing within 30 days of the due date.

(4) The registration fee imposed by the Division of Motor Vehicles and any other

information required by the Division of Motor Vehicles to comply with the

provisions of Chapter 20 of the General Statutes.

(5) Instructions for payment.

(a1) Proration. – When a new registration is obtained for a registered classified motor

vehicle that is registered under the annual system, the taxes are prorated for the remainder of the

calendar year. The amount of prorated taxes due is the product of the proration fraction and the

taxes computed according to subsection (a) of this section. The numerator of the proration

fraction is the number of full months remaining in the calendar year following the registration

application date and the denominator of the fraction is 12.

(a2) Repealed by Session Laws 2009-445, s. 24(a), effective July 1, 2011, and applicable

to combined tax and registration notices issued on or after that date, or when the Division of

motor vehicles and the Department of Revenue certify that the integrated computer system or

registration renewal and property tax collection for motor vehicles is in operation, whichever

occurs first.

(b) Distribution and Collection Fees. – The Property Tax Division of the Department of

Revenue or a third-party contractor selected by the Property Tax Division must send a copy of

the combined tax and registration notice for a registered classified motor vehicle to the motor

vehicle owner, as defined in G.S. 20-4.01. Upon receiving written consent from the motor

vehicle owner, the notice required under this subsection may be sent electronically to an e-mail

address provided by the motor vehicle owner. The Department must establish a fee equal to the

actual cost of preparing, printing, and sending the notice. The Department may receive a fee for

each notice generated for a vehicle registered in a county or municipal corporation from the taxes

and fees remitted to the county or municipal corporation in which the vehicle is registered. The

collecting authority is responsible for collecting county and municipal taxes and fees assessed

under this Article and may receive a fee for collecting these taxes and fees. The amount of this

fee for an agent contracting with the Division of Motor Vehicles must equal at least the

applicable amount set under G.S. 20-63(h). The amount of this fee for the Division of Motor

Vehicles is the amount set by the memorandum of understanding entered into under G.S.

105-330.11 but shall not exceed the amount set under G.S. 20-63. The Property Tax Division

must establish procedures to ensure that tax payments and fees received pursuant to this Article

and Chapter 20 of the General Statutes are properly accounted for and taxes and fees due other

taxing units and the Division of Motor Vehicles are remitted at least once each month.

(b1) Repealed by Session Laws 1995, c. 329, s. 2.

(c) Notice for Unregistered Vehicle. – The assessor must prepare and send a tax notice

for each unregistered classified motor vehicle before September 1 following the January 31

listing date. The notice must include all county and special district taxes due on the motor

vehicle. In computing the taxes, the assessor must use the tax rates of the taxing units in effect

for the fiscal year that begins on July 1 following the January 31 listing date. Municipalities must

list, assess, and tax unregistered classified motor vehicles as provided in G.S. 105-326, 105-327,

and 105-328.

(d) Scope of Levy. – A county must include taxes on registered classified motor vehicles

in the tax levy for the fiscal year in which the taxes are collected.


(e) Repealed by Session Laws 2012-79, s. 3.5, effective June 26, 2012. (1991, c. 624, s.

1; 1991 (Reg. Sess., 1992), c. 961, s. 6; 1995, c. 24, s. 1; c. 329, s. 2; c. 510, s. 3; 2005-294, s. 6;

2005-313, s. 8; 2006-259, s. 31.5; 2007-471, ss. 4, 5; 2007-527, s. 22(b); 2008-134, s. 65;

2009-445, ss. 24(a), 25(a); 2010-95, s. 22(c), (d); 2011-330, s. 42(a); 2012-79, ss. 3.5, 3.6;

2013-372, s. 2(b); 2013-414, s. 70(b)-(d); 2014-3, s. 13.3; 2015-108, s. 1.)

§ 105-330.6. Motor vehicle tax year; transfer of plates; surrender of plates.

(a) Tax Year. – The tax year for a classified motor vehicle listed pursuant to G.S.

105-330.3(a)(1) and registered under the staggered system begins on the first day of the first

month following the date on which the former registration expires or the new registration is

applied for and ends on the last day of the month in which the current registration expires. The

tax year for a classified motor vehicle listed pursuant to G.S. 105-330.3(a)(1) and registered

under the annual system begins on the first day of the first month following the date on which the

registration expires or the new registration is applied for and ends the following December 31.

The tax year for a classified motor vehicle listed pursuant to G.S. 105-330.3(a)(2) is the fiscal

year that opens in the calendar year in which the vehicle is required to be listed.

(a1) Change in Tax Year. – If the tax year for a classified motor vehicle changes because

of a change in its registration for a reason other than the transfer of its registration plates to

another classified motor vehicle pursuant to G.S. 20-64, and the new tax year begins before the

expiration of the vehicle's original tax year, the taxpayer may receive a credit, in the form of a

release, against the taxes on the vehicle for the new tax year. The amount of the credit is equal to

a proportion of the taxes paid on the vehicle for the original tax year. The proportion is the

number of full calendar months remaining in the original tax year as of the first day of the new

tax year, divided by the number of months in the original tax year. To obtain the credit allowed

in this subsection, the taxpayer must apply within 30 days after the taxes for the new tax year are

due and must provide the county tax collector information establishing the original tax year of

the vehicle, the amount of taxes paid on the vehicle for that year, and the reason for the change in

registration.

(b) Transfer of Plates. – If the owner of a classified motor vehicle listed pursuant to G.S.

105-330.3(a)(1) transfers the registration plates from the listed vehicle to another classified

motor vehicle pursuant to G.S. 20-64 during the listed vehicle's tax year, the vehicle to which the

plates are transferred is not required to be listed or taxed until the current registration expires or

is renewed.

(c) Surrender of Plates. – If the owner of a classified motor vehicle listed pursuant to

G.S. 105-330.3(a)(1) either transfers the motor vehicle to a new owner or moves out-of-state and

registers the vehicle in another jurisdiction, and the owner surrenders the registration plates from

the listed vehicle to the Division of Motor Vehicles, then the owner may apply for a release or

refund of taxes on the vehicle for any full calendar months remaining in the vehicle's tax year

after the date of surrender. To apply for a release or refund, the owner must present to the county

tax collector within one year after surrendering the plates the receipt received from the Division

of Motor Vehicles accepting surrender of the registration plates. The county tax collector shall

then multiply the amount of the taxes for the tax year on the vehicle by a fraction, the

denominator of which is the number of months in the tax year and the numerator of which is the

number of full calendar months remaining in the vehicle's tax year after the date of surrender of

the registration plates. The product of the multiplication is the amount of taxes to be released or

refunded. If the taxes have not been paid at the date of application, the county tax collector shall


make a release of the prorated taxes and credit the owner's tax notice with the amount of the

release. If the taxes have been paid at the date of application, the county tax collector shall direct

an order for a refund of the prorated taxes to the county finance officer, and the finance officer

shall issue a refund to the vehicle owner. (1991, c. 624, s. 1; 1991 (Reg. Sess., 1992), c. 961, s.

7; 1995, c. 510, s. 4; 1998-139, s. 3; 2001-406, s. 1; 2001-497, s. 1(a); 2005-313, s. 9.)

§ 105-330.7. (Repealed for combined tax and registration notices issued on or after July 1,

2013) List of delinquents sent to Division of Motor Vehicles.

On the tenth day of each month the county tax collector shall prepare a list with the name and

address of the owner and the vehicle identification number of every classified motor vehicle

listed pursuant to G.S. 105-330.3(a)(1) on which taxes remain unpaid on that date and on which

taxes became due on the first day of the fourth month preceding that date. The tax collector shall

mail that list to the Division of Motor Vehicles. The list shall be in the form and contain the

information required by the Division of Motor Vehicles. (1991, c. 624, s. 1; 1991 (Reg. Sess.,

1992), c. 961, s. 8; 2005-294, s. 13; 2006-259, s. 31.5; 2007-527, s. 22; 2008-134, s. 65;

2005-294, s. 7; 2011-330, s. 42(a); 2012-79, s. 3.6; 2013-414, ss. 70(b), (d).)

§ 105-330.8. Deadlines not extended.

Except as otherwise provided in this Article, the following sections of the General Statutes

do not apply:

(1) G.S. 105-395.1 and G.S. 103-5.

(2) G.S. 105-321(f).

(3) G.S. 105-360. (1991, c. 624, s. 1; 2009-445, s. 24(a); 2010-95, s. 22(c);

2013-414, s. 70(b).)

§ 105-330.9. Antique automobiles.

(a) Definition. – For the purpose of this section, the term "antique automobile" means a

motor vehicle that meets all of the following conditions:

(1) It is registered with the Division of Motor Vehicles and has an historic vehicle

special license plate under G.S. 20-79.4.

(2) It is maintained primarily for use in exhibitions, club activities, parades, and

other public interest functions.

(3) It is used only occasionally for other purposes.

(4) It is owned by an individual.

(5) It is used by the owner for a purpose other than the production of income and

is not used in connection with a business.

(b) Classification. – Antique automobiles are designated a special class of property under

Article V, Sec. 2(2) of the North Carolina Constitution and must be assessed for taxation in

accordance with this section. An antique automobile must be assessed at the lower of its true

value or five hundred dollars ($500.00). (1995, c 512, s 2; 2009-445, s. 24(a); 2013-414, s.

70(b).)

§ 105-330.10. Disposition of interest.

The interest collected on unpaid registration fees pursuant to G.S. 105-330.4 shall be

transferred on a monthly basis to the North Carolina Highway Fund. (2005-294, ss. 8, 9;

2006-30, s. 3; 2006-259, s. 31.5; 2007-471, s. 7(a); 2007-527, s. 22(a)-(c); 2008-134, ss. 63, 65,


66, 79; 2009-445, s. 25(b); 2010-95, s. 22(a), (b), (e); 2011-330, s. 42(a)-(c); 2013-414, s. 70(a),

(c), (d); 2015-241, s. 29.30(n).)

§ 105-330.11. Memorandum of understanding.

The Department of Revenue, acting through the Property Tax Division, and the Department

of Transportation, acting through the Division of Motor Vehicles are directed to enter into a

memorandum of understanding concerning the administration of this Article. The memorandum

of understanding must include the following:

(1) A procedure for the administration of the listing, appraisal, and assessment of

classified motor vehicles.

(2) Information concerning vehicle identification, the name and address of a

vehicle's owner, and other information that will be required on a motor vehicle

registration form to implement the tax listing and collection provisions of this

Article.

(3) A procedure for the business practices, accounting, and costs of carrying out

the integrated computer system for registration renewal and property tax

collection for motor vehicles once the system has been certified to be in

operation by the Department of Revenue and the Department of

Transportation. The Departments must consult with the North Carolina

Association of County Commissioners, acting on behalf of the counties, and

the North Carolina League of Municipalities, acting on behalf of the

municipalities, in developing the procedures under this subdivision and obtain

their signed endorsements before any part of this procedure is implemented.

(2008-134, s. 64; 2009-445, s. 24(a); 2013-414, s. 70(b).)

§§ 105-330.12 through 105-332: Reserved for future codification purposes.

Article 23.

Public Service Companies.


The following definitions apply in this Article unless the context requires a different

meaning:

(1) Airline company. – A company engaged in the business of transporting

passengers and property by aircraft for hire within, into, or from this State.

(2) Bus line company. – A company engaged in the business of transporting

passengers and property by motor vehicle for hire over the public highways of

this State (but not including a bus line company operating primarily upon the

public streets within a single local taxing unit), whether the transportation is

within, into, or from this State.

(3) Distributable system property. – All real property and personal property

owned or used by a railroad company other than nondistributable system

property.

(4) Electric membership corporation. – A company organized, reorganized, or

domesticated under Chapter 117 of the General Statutes and engaged in the


business of supplying electricity for light, heat, or power to consumers in this

State.

(5) Electric power company. – A company engaged in the business of supplying

electricity for light, heat, or power to consumers in this State.


(7) Flight equipment. – Aircraft fully equipped for flying and used in any

operation within this State.

(8) Gas company. – A company engaged in the business of supplying artificial or

natural gas to, from, within, or through this State through pipe or tubing for

light, heat, or power to consumers in this State.

(9) Locally assigned rolling stock. – Rolling stock that is owned or leased by a

motor freight carrier company, specifically assigned to a terminal or other

premises, and regularly used at the premises to which assigned.


1, 2015) Mobile telecommunications company. – A company providing a

mobile telecommunications service as defined in G.S. 105-164.3.

(10) Motor freight carrier company. – A company engaged in the business of

transporting property by motor vehicle for hire over the public highways of

this State as provided in this subdivision:

a. As to interstate carrier companies domiciled in North Carolina, this

term includes carriers who regularly transport property by tractor

trailer to or from one or more terminals owned or leased by the carrier

outside this State or two or more terminals inside this State. For

purposes of appraisal and allocation only, the term also includes a

North Carolina interstate carrier that does not have a terminal outside

this State but whose operations outside the State are sufficient to

require the payment of ad valorem taxes on a portion of the value of

the rolling stock of the carrier to taxing units in one or more other

states.

b. As to interstate carrier companies domiciled outside this State, this

term includes carriers who regularly transport property by tractor

trailer to or from one or more terminals owned or leased by the carrier

inside this State.

c. As to intrastate carrier companies, this term includes only those

carriers that are engaged in the transportation of property by tractor

trailer to or from two or more terminals owned or leased by the carrier

in this State.

(11) Nondistributable system property. – The following properties owned by a

railroad company: land other than right-of-way, depots, machine shops,

warehouses, office buildings, other structures, and the contents of the

structures listed in this subdivision.

(12) Nonsystem property. – The real and tangible personal property owned by a

public service company but not used in its public service activities.

(13) Pipeline company. – A company engaged in the business of transporting

natural gas, petroleum products, or other products through pipelines to, from,

within, or through this State, or having control of pipelines for such a purpose.



2015) Public service company. – A railroad company, a pipeline company, a

gas company, an electric power company, an electric membership corporation,

a telephone company, a telegraph company, a bus line company, an airline

company, or a motor freight carrier company. The term also includes any

company performing a public service that is regulated by the United States

Department of Energy, the United States Department of Transportation, the

Federal Communications Commission, the Federal Aviation Agency, or the

North Carolina Utilities Commission, except that the term does not include a

water company, providers of mobile telecommunications service as defined in

G.S. 105-164.3, a cable television company, or a radio or television

broadcasting company.


1, 2015) Public service company. – A railroad company, a pipeline company,

a gas company, an electric power company, an electric membership

corporation, a telephone company, a bus line company, an airline company, a

motor freight carrier company, a mobile telecommunications company, or a

tower aggregator company. The term also includes any company performing a

public service that is regulated by the United States Department of Energy, the

United States Department of Transportation, the Federal Communications

Commission, the Federal Aviation Agency, or the North Carolina Utilities

Commission, except that the term does not include a water company, a cable

television company, or a radio or television broadcasting company.

(15) Railroad company. – A company engaged in the business of operating a

railroad to, from, within or through this State on rights-of-way owned or

leased by the company. It also means a company operating a passenger

service on the lines of any railroad located wholly or partly in this State.

(16) Rolling stock. – Motor vehicles, railroad locomotives, and railroad cars that

are propelled by mechanical or electrical power and used upon the highways

or, in the case of railroad vehicles, upon tracks.

(17) System property. – The real property and personal property used by a public

service company in its public service activities. The term also includes public

service company property under construction on the day as of which property

is assessed which when completed will be used by the owner in its public

service activities.


1, 2015) Tangible personal property of a mobile telecommunications

company. – All tangible personal property located in this State that is owned

by a mobile telecommunications company or is leased to and capitalized on

the books of a mobile telecommunications company in accordance with

generally accepted accounting principles, including cellular towers, cellular

equipment shelters, and site improvements at cellular tower locations. The

term does not include FCC licenses or authorizations or other intangible

personal property.

(17b) (Effective for taxes imposed for taxable years beginning on or after July

1, 2015) Tangible personal property of a tower aggregator company. – All


tangible personal property located in this State that is owned by a tower

aggregator company or is leased to and capitalized on the books of a tower

aggregator company in accordance with generally accepted accounting

principles, including cellular towers, cellular equipment shelters, and site

improvements at cellular tower locations.

(18) (Repealed effective for taxes imposed for taxable years beginning on or

after July 1, 2015) Telegraph company. – A company engaged in the

business of transmitting telegraph messages to, from, within, or through the

State.


2015) Telephone company. – A company engaged in the business of

transmitting telephone messages and conversations to, from, within, or

through this State.


1, 2015) Telephone company. – A company engaged in the business of

transmitting telephone messages and conversations to, from, within, or

through this State, except that the term does not include a mobile

telecommunications company.


(21) Terminal. – A motor freight carrier facility that includes buildings for the

handling and temporary storage of freight pending transfer between locations.

The term also includes a facility that handles truckloads only and typically

consists of a wide, open space where rolling stock is parked and a building for

offices and maintenance of rolling stock.


1, 2015) Tower aggregator company. – A company that provides tower

infrastructure for broadcasting and mobile telephony and that leases space on

the tower infrastructure to mobile telecommunications companies. (1939, c.

310, ss. 1600-1605; 1943, c. 634, s. 3; 1965, c. 287, s. 17; 1971, c. 806, s. 1; c.

1121, s. 4; 1973, c. 198; c. 783, ss. 1-5; c. 1180; 1991 (Reg. Sess., 1992), c.

961, s. 1; 1995, c. 350, ss. 1, 2; 1995 (Reg. Sess., 1996), c. 646, s. 18;

1997-23, ss. 6, 7; 1998-98, s. 25; 2010-95, ss. 19, 20; 2011-330, s. 41; 2014-3,

s. 11.1(a).)

§ 105-334. Duty to file report; penalty for failure to file.

(a) Every public service company, whether incorporated under the laws of this State or

any other state or any foreign nation, whose property is subject to taxation in this State, shall

prepare and deliver to the Department of Revenue each year a report showing (as of January 1)

such information with regard to the property it owns and the system property it leases as the

Department of Revenue may by regulation prescribe. This report shall be filed on or before the

last day of March, and the following affirmation, which shall be annexed to the report, shall be

signed by a principal officer of the public service company making the report:

Under penalties prescribed by law, I hereby affirm that to the best of my knowledge and

belief this report, including any accompanying statements, inventories, schedules, and other

information is true and complete.


(b) Any individual who willfully subscribes a report required by this section which he

does not believe to be true and correct as to every material matter shall be guilty of a Class 2

misdemeanor.

(c) For good cause the Department may grant reasonable extensions of time for filing the

required reports.

(d) The Department may require any additional reports or information it deems necessary

to properly carry out its duties under this Article.

(e) The provisions of G.S. 105-291 and 105-312 are made specifically applicable to all

proceedings taken under this Article. (1939, c. 310, ss. 1600-1606; 1943, c. 634, s. 3; 1965, c.

287, s. 17; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1993, c. 539, s. 721; 1994, Ex. Sess., c. 24, s.

14(c).)

§ 105-335. (Effective for taxes imposed for taxable years beginning before July 1, 2015)

Appraisal of property of public service companies.

(a) Duty to Appraise. – In accordance with the provisions of subsection (b), below, the

Department of Revenue shall appraise for taxation the true value of each public service company

(other than bus line, motor freight carrier, and airline companies) as a system (both inside and

outside this State). Certain specified properties of bus line, motor freight carrier, and airline

companies shall be appraised by the Department in accordance with the provisions of subsection

(c), below, and all other properties of such companies shall be listed, appraised, and assessed in

the manner prescribed by this Subchapter for the properties of taxpayers other than public service

companies.

(b) Property of Public Service Companies Other Than Those Noted in Subsection (c). –

(1) System Property. – Each year, as of January 1, the Department of Revenue

shall appraise at its true value (as defined in G.S. 105-283) the system

property used by each public service company both inside and outside this

State. Property leased by a public service company shall be included in

appraising the value of its system property if necessary to ascertain the true

value of the company's system property.

(2) Nonsystem Personal Property. – Each year as of January 1, the Department

shall appraise at its true value (as defined in G.S. 105-283) each public service

company's nonsystem tangible personal property subject to taxation in this

State.

(3) Nonsystem Real Property. – In accordance with the county in which the

public service company's nonsystem real property is located and the schedules

set out in G.S. 105-286 and 105-287, the Department of Revenue shall

appraise at its true value (as defined in G.S. 105-283) each public service

company's nonsystem real property subject to taxation in this State.

(c) Property of Bus Line, Motor Freight Carrier, and Airline Companies. –

(1) Bus Company Rolling Stock. – Each year as of January 1, the Department

shall appraise at its true value (as defined in G.S. 105-283) the rolling stock

owned or leased by or operated under the control of each bus line company,

which bus line company is domiciled in this State or which is regularly

engaged in business in this State.

(2) Motor Freight Carrier Company Rolling Stock. – Each year as of January 1,

the Department shall appraise at its true value (as defined in G.S. 105-283) the


rolling stock owned by a motor freight carrier company or leased by a motor

freight carrier company and operated by its employees which motor freight

carrier company is domiciled in this State or is regularly engaged in business

in this State at a terminal owned or leased by the carrier.

(3) Flight Equipment. – Each year, as of January 1, the Department shall appraise

at its true value (as defined in G.S. 105-283) the flight equipment owned or

leased by or operated under the control of each airline company that is

domiciled in the State or that is regularly engaged in business at some airport

in this State. (1939, c. 310, s. 1608; 1971, c. 806, s. 1; 1973, c. 476, s. 193; c.

783, s. 6; c. 1180.)

§ 105-335. (Effective for taxes imposed for taxable years beginning on or after July 1,

2015) Appraisal of property of public service companies.

(a) Duty to Appraise. – The Department of Revenue shall appraise for taxation each

public service company in accordance with subsection (b) of this section except for a public

service company listed in this subsection. The Department shall appraise certain specified

properties of the following public service companies in accordance with subsection (c) of this

section, and all other properties of such companies shall be listed, appraised, and assessed in the

manner prescribed by this Subchapter for the properties of taxpayers other than public service

companies:

(1) Bus line.

(2) Motor freight carrier.

(3) Airline.

(4) Mobile telecommunications company.

(5) Tower aggregator company.

(b) Property of Public Service Companies Other Than Those Noted in Subsection (c). –

(1) System Property. – Each year, as of January 1, the Department of Revenue

shall appraise at its true value the system property used by each public service

company both inside and outside this State. Property leased by a public

service company shall be included in appraising the value of its system

property if necessary to ascertain the true value of the company's system

property.

(2) Nonsystem Personal Property. – Each year as of January 1, the Department

shall appraise at its true value each public service company's nonsystem

tangible personal property subject to taxation in this State.

(3) Nonsystem Real Property. – In accordance with the county in which the

public service company's nonsystem real property is located and the schedules

set out in G.S. 105-286 and 105-287, the Department of Revenue shall

appraise at its true value each public service company's nonsystem real

property subject to taxation in this State.

(c) Property of Bus Line, Motor Freight Carrier, Airline, Mobile Telecommunications,

and Tower Aggregator Companies. –

(1) Bus Company Rolling Stock. – Each year as of January 1, the Department

shall appraise at its true value the rolling stock owned or leased by or operated

under the control of each bus line that is domiciled in this State or that is

regularly engaged in business in this State.


(2) Motor Freight Carrier Company Rolling Stock. – Each year as of January 1,

the Department shall appraise at its true value the rolling stock owned by a

motor freight carrier company or leased by a motor freight carrier company

and operated by its employees that is domiciled in this State or that is

regularly engaged in business in this State at a terminal owned or leased by

the carrier.

(3) Flight Equipment. – Each year, as of January 1, the Department shall appraise

at its true value the flight equipment owned or leased by or operated under the

control of each airline company that is domiciled in the State or that is

regularly engaged in business at some airport in this State.

(4) Property of Mobile Telecommunications Company. – Each year, as of January

1, the Department shall appraise at its true value the tangible personal

property of a mobile telecommunications company as provided in G.S.

105-336(c) and G.S. 105-336(d).

(5) Property of Tower Aggregator Company. – Each year, as of January 1, the

Department shall appraise at its true value the tangible personal property of a

tower aggregator company as provided in G.S. 105-336(d). (1939, c. 310, s.

1608; 1971, c. 806, s. 1; 1973, c. 476, s. 193; c. 783, s. 6; c. 1180; 2014-3, s.

11.1(b).)


Methods of appraising certain properties of public service companies.

(a) Appraising System Property of Public Service Companies Other Than Those Noted in

Subsection (b). – In determining the true value of each public service company (other than one

covered by subsection (b), below) as a system the Department of Revenue shall give

consideration to the following:

(1) The market value of the company's capital stock and debt, taking into account

the influence of any nonsystem property.

(2) The book value of the company's system property as reflected in the books of

account kept under the regulations of the appropriate federal or State

regulatory agency and what it would cost to replace or reproduce the system

property, less a reasonable allowance for depreciation.

(3) The gross receipts and operating income of the company.

(4) Any other factor or information that in the judgment of the Department has a

bearing on the true value of the company's system property.

(b) Appraising Rolling Stock and Flight Equipment. – In determining the true value of

the rolling stock of bus line and motor freight carrier companies and the flight equipment of

airline companies, the Department of Revenue shall consider the book value of the property as

reflected in the books of account kept under the regulations of the appropriate federal or State

regulatory agency and what it would cost to replace or reproduce the property in its existing

condition. (1939, c. 310, s. 1608; 1971, c. 806, s. 1; 1973, c. 476, s. 193.)


2015) Methods of appraising certain properties of public service companies.

(a) Appraising System Property of Public Service Companies Other Than Those Noted in

Subsections (b), (c), and (d) of This Section. – The Department of Revenue shall give


consideration to the factors listed in this subsection in determining the true value of each public

service company as a system, other than one covered by subsection (b), (c), or (d) of this

subsection. The factors are:

(1) The market value of the company's capital stock and debt, taking into account

the influence of any nonsystem property.

(2) The book value of the company's system property as reflected in the books of

account kept under the regulations of the appropriate federal or State

regulatory agency and what it would cost to replace or reproduce the system

property, less a reasonable allowance for depreciation.

(3) The gross receipts and operating income of the company.

(4) Any other factor or information that in the judgment of the Department has a

bearing on the true value of the company's system property.

(b) Appraising Rolling Stock and Flight Equipment. – In determining the true value of

the rolling stock of bus line and motor freight carrier companies and the flight equipment of

airline companies, the Department of Revenue shall consider the book value of the property as

reflected in the books of account kept under the regulations of the appropriate federal or State

regulatory agency and what it would cost to replace or reproduce the property in its existing

condition.

(c) Appraising Tangible Personal Property of Mobile Telecommunications Companies. –

In determining the true value of the tangible personal property of a mobile telecommunications

company (excluding towers), the Department of Revenue shall consider the original cost of the

property as reflected in the books of account maintained by the company in accordance with

generally accepted accounting principles. The Department of Revenue may also consider what it

would cost to replace or reproduce the property. In either case, an appropriate deduction shall be

made for all forms of depreciation, including physical deterioration, functional obsolescence, and

external or economic obsolescence.

(d) Appraising Tangible Personal Property of Tower Aggregator Companies and Certain

Property of Mobile Telecommunications Companies. – In determining the true value of the

tangible personal property of a tower aggregator company (excluding towers), the Department of

Revenue shall consider the original cost of the property as reflected in the books of account

maintained by the company in accordance with generally accepted accounting principles and

may also consider what it would cost to replace or reproduce the property. In determining the

true value of a tower of a tower aggregator company or a mobile telecommunications company,

the Department of Revenue shall consider what it would cost to replace or reproduce the tower,

based on tower height and type, as determined by a nationally recognized cost service commonly

utilized by appraisers. For all property, an appropriate deduction shall be made for all forms of

depreciation, including physical deterioration, functional obsolescence, and external or economic

obsolescence. (1939, c. 310, s. 1608; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 2014-3, s. 11.1(c).)


Apportionment of taxable values to this State.

With respect to any public service company operating both inside and outside this State, it

shall be the duty of the Department of Revenue to apportion for taxation in this State a fair and

reasonable share of the value of the company as a system or its rolling stock or flight equipment

as appraised under the provisions of G.S. 105-336. Thus, when the Department has determined

true value in accordance with the provisions of G.S. 105-336(a) or G.S. 105-336(b), it shall


ascertain the portion of the total value subject to taxation in this State by applying property,

business, and mileage factors thereto in accordance with the ratio that the company's property,

business, or mileage in this State bears to its total property, business, or mileage. In its discretion,

the Department may use one or more of the factors listed in the preceding sentence in order to

achieve a fair and accurate result in the apportionment of the value of the property of any public

service company. As used in this section,

(1) The term "business factor'' means data that reflect the use of the company's

property, such as gross revenue, net income, tons of freight carried, revenue

ton miles, passenger miles, car miles, ground hours, and comparable data.

(2) The term "mileage factor'' means factual information as to the linear miles of

the company's track, wire, lines, pipes, routes, and similar operational routes

and factual information as to the miles traveled by the company's rolling

stock.

(3) The term "property factor'' means investment in property; it may be either

gross or net investment or any other reasonable figure reflecting the

company's investment in property. (1939, c. 310, s. 1609; 1971, c. 806, s. 1;

1973, c. 476, s. 193.)


2015) Apportionment of taxable values to this State.

With respect to any public service company operating both inside and outside this State,

other than a mobile telecommunications company or a tower aggregator company, the

Department of Revenue shall apportion for taxation in this State a fair and reasonable share of

the value of the company as a system or its rolling stock or flight equipment as appraised under

the provisions of G.S. 105-336. Thus, when the Department has determined true value in

accordance with the provisions of G.S. 105-336(a) or G.S. 105-336(b), it shall ascertain the

portion of the total value subject to taxation in this State by applying property, business, and

mileage factors thereto in accordance with the ratio that the company's property, business, or

mileage in this State bears to its total property, business, or mileage. In its discretion, the

Department may use one or more of the factors listed in the preceding sentence in order to

achieve a fair and accurate result in the apportionment of the value of the property of any public

service company. The following definitions apply in this section:

(1) Business factor. – Data that reflect the use of the company's property, such as

gross revenue, net income, tons of freight carried, revenue ton miles,

passenger miles, car miles, ground hours, and comparable data.

(2) Mileage factor. – Factual information as to the linear miles of the company's

track, wire, lines, pipes, routes, and similar operational routes and factual

information as to the miles traveled by the company's rolling stock.

(3) Property factor. – Investment in property; it may be either gross or net

investment or any other reasonable figure reflecting the company's investment

in property. (1939, c. 310, s. 1609; 1971, c. 806, s. 1; 1973, c. 476, s. 193;

2014-3, s. 11.1(d).)


Allocation of appraised valuation of system property among local taxing units.


(a) State Board's Duty. – For purposes of taxation by local taxing units in this State, the

Department of Revenue shall allocate the valuations of public service company property among

the local taxing units in accordance with the provisions of this section.

(b) System Valuation of Companies Other Than Those Noted in Subsection (c). –

(1) System Property of Railroad Companies. – The appraised valuation of the

distributable system property of a railroad shall be allocated for taxation to the

local taxing units in accordance with the ratio of the miles of all the

company's tracks in the local taxing unit to the total miles of all the company's

tracks in this State, adjusted to reflect density of traffic in the local taxing unit.

(2) System Property of Telephone Companies. –

a. The Department of Revenue shall divide each telephone company's

system property in this State into the following two classes and shall

determine the original cost of that property and the percentage thereof

represented by the property in each of the two classes.

- Class 1: Property located in this State that is identified under the

applicable uniform system of accounts as central office equipment,

large P.B.X. equipment, motor vehicles, tools and work equipment,

office furniture and equipment, materials and supplies, and land and

buildings (including towers and other structures).

- Class 2: Property located in this State that does not come within

Class 1.

The Department of Revenue shall then apply the percentages

obtained in accordance with this subdivision to the appraised valuation

of the company's system property in this State and thereby derive the

proportions of appraised valuation to be allocated as Class 1 and Class

2 valuations to local taxing units in accordance with subdivision

(b)(2)b, below.

b. Having made the division required by subdivision (b)(2)a, above, the

Department of Revenue shall allocate the appraised valuation of the

properties in each class among the local taxing units of the State as

follows:

- Class 1: The appraised valuations of property in this class shall be

allocated among the local taxing units in which such property of the

company is situated on January 1 in the proportion that the original

cost of such property in the taxing unit bears to the original cost of all

such property in this State.


allocated among the local taxing units in which the company operates

in the proportion that the miles of the company's single aerial wire and

single wire in cable (including single tube in coaxial cable) in the

taxing unit bears to the total of such wire miles of the company in this

State.

(3) System Property of Other Companies Appraised by the Department of

Revenue. –

a. The provisions of this subdivision (b)(3) shall govern the allocation of

the property of all companies appraised by the Department of Revenue


except railroad, telephone, bus line, motor freight carrier, and airline

companies.

b. The appraised valuation of the system property of such a company

shall be allocated for taxation to the local taxing units in which the

company operates in the proportion that the original cost of the taxable

system property in the local taxing unit on January 1 bears to the

original cost of all the taxable system property in this State. If in any

local taxing unit the company owns system property acquired prior to

January 1, 1972, for which the original cost cannot be definitely

ascertained, a reasonable estimate of the original cost of that property

shall be made by the company, and this estimate shall be used by the

Department of Revenue for allocation purposes as if it were the actual

original cost of the property.

(c) Property of Bus Line, Motor Freight Carrier, and Airline Companies. –

(1) The appraised valuation of a bus line company's rolling stock shall be

allocated for taxation to each local taxing unit according to the ratio of the

company's scheduled miles during the calendar year preceding January 1 in

each such unit to the company's total scheduled miles in this State for the

same period. In no event, however, shall the State Board make an allocation to

a taxing unit if, when computed, the valuation for that taxing unit amounts to

less than five hundred dollars ($500.00).

(2) The appraised valuation of the rolling stock (other than locally assigned

rolling stock) owned or leased by a motor freight carrier company shall be

allocated for taxation to each local taxing unit in which the company has a

terminal according to the ratio of the tons of freight handled in the calendar

year preceding January 1 at the company's terminals within the taxing unit to

the total tons of freight handled by the company in this State in the same

period. If a North Carolina interstate motor freight carrier company has no

terminal outside this State, but has been required to pay ad valorem tax to one

or more taxing units outside this State, there shall be allowed a reduction in

the North Carolina valuation measured by the ratio of the rolling stock subject

to ad valorem taxation outside the State to all of the carrier's rolling stock.

(3) The appraised valuation of an airline company's flight equipment shall be

allocated for taxation to each local taxing unit in which an airport used by the

company is situated according to the ratio obtained by averaging the following

two ratios: the ratio of the company's ground hours in the taxing unit in the

year preceding January 1 to the company's ground hours in the State in the

same period, and the ratio of the company's gross revenue in the taxing unit in

the year preceding January 1 to the company's gross revenue in the State in

the same period. (1939, c. 310, s. 1610; 1971, c. 806, s. 1; 1973, c. 476, s.

193; c. 1180; 1997-456, s. 27.)


2015) Allocation of appraised valuation of public service property among local

taxing units.


(a) State Board's Duty. – For purposes of taxation by local taxing units in this State, the

Department of Revenue shall allocate the valuations of public service company property among

the local taxing units in accordance with the provisions of this section.

(b) System Valuation of Companies Other Than Those Noted in Subsection (c). –

(1) System Property of Railroad Companies. – The appraised valuation of the

distributable system property of a railroad shall be allocated for taxation to the

local taxing units in accordance with the ratio of the miles of all the

company's tracks in the local taxing unit to the total miles of all the company's

tracks in this State, adjusted to reflect density of traffic in the local taxing unit.

(2) System Property of Telephone Companies. –

a. The Department of Revenue shall divide each telephone company's

system property in this State into the following two classes and shall

determine the original cost of that property and the percentage thereof

represented by the property in each of the two classes.

- Class 1: Property located in this State that is identified under the

applicable uniform system of accounts as central office equipment,

large P.B.X. equipment, motor vehicles, tools and work equipment,

office furniture and equipment, materials and supplies, and land and

buildings (including towers and other structures).

- Class 2: Property located in this State that does not come within

Class 1.

The Department of Revenue shall then apply the percentages

obtained in accordance with this subdivision to the appraised valuation

of the company's system property in this State and thereby derive the

proportions of appraised valuation to be allocated as Class 1 and Class

2 valuations to local taxing units in accordance with subdivision

(b)(2)b, below.

b. Having made the division required by subdivision (b)(2)a, above, the

Department of Revenue shall allocate the appraised valuation of the

properties in each class among the local taxing units of the State as

follows:


allocated among the local taxing units in which such property of the

company is situated on January 1 in the proportion that the original

cost of such property in the taxing unit bears to the original cost of all

such property in this State.


allocated among the local taxing units in which the company operates

in the proportion that the miles of the company's single aerial wire and

single wire in cable (including single tube in coaxial cable) in the

taxing unit bears to the total of such wire miles of the company in this

State.

(3) System Property of Other Companies Appraised by the Department of

Revenue. –

a. The provisions of this subdivision govern the allocation of the property

of all companies appraised by the Department of Revenue except


railroad, telephone, bus line, motor freight carrier, airline companies,

mobile telecommunications companies, and tower aggregator

companies.

b. The appraised valuation of the system property of such a company is

allocated for taxation to the local taxing units in which the company

operates in the proportion that the original cost of the taxable system

property in the local taxing unit on January 1 bears to the original cost

of all the taxable system property in this State. If in any local taxing

unit the company owns system property acquired prior to January 1,

1972, for which the original cost cannot be definitely ascertained, the

company shall make a reasonable estimate of the original cost of that

property, and the Department shall use this estimate for allocation

purposes as if it were the actual original cost of the property.

(c) Certain Property of Bus Line, Motor Freight Carrier, and Airline Companies. –

(1) The appraised valuation of a bus line company's rolling stock is allocated for

taxation to each local taxing unit according to the ratio of the company's

scheduled miles during the calendar year preceding January 1 in each unit to

the company's total scheduled miles in this State for the same period. In no

event, however, shall the State Board make an allocation to a taxing unit if,

when computed, the valuation for that taxing unit amounts to less than five

hundred dollars ($500.00).

(2) The appraised valuation of the rolling stock (other than locally assigned

rolling stock) owned or leased by a motor freight carrier company is allocated

for taxation to each local taxing unit in which the company has a terminal

according to the ratio of the tons of freight handled in the calendar year

preceding January 1 at the company's terminals within the taxing unit to the

total tons of freight handled by the company in this State in the same period. If

a North Carolina interstate motor freight carrier company has no terminal

outside this State, but has been required to pay ad valorem tax to one or more

taxing units outside this State, a reduction is allowed in the North Carolina

valuation measured by the ratio of the rolling stock subject to ad valorem

taxation outside the State to all of the carrier's rolling stock.

(3) The appraised valuation of an airline company's flight equipment is allocated

for taxation to each local taxing unit in which an airport used by the company

is situated according to the ratio obtained by averaging the following two

ratios: the ratio of the company's ground hours in the taxing unit in the year

preceding January 1 to the company's ground hours in the State in the same

period, and the ratio of the company's gross revenue in the taxing unit in the

year preceding January 1 to the company's gross revenue in the State in the

same period.

(4) Repealed by Session Laws 2015-6, s. 2.17(a), effective for taxes imposed for

taxable years beginning on or after July 1, 2015. (1939, c. 310, s. 1610; 1971,

c. 806, s. 1; 1973, c. 476, s. 193; c. 1180; 1997-456, s. 27; 2014-3, s. 11.1(e);

2015-6, s. 2.17(a).)



Certification of appraised valuations of nonsystem property and locally assigned

rolling stock.

Having determined the appraised valuations of the nonsystem properties of public service

companies in accordance with subdivisions (b)(2) and (b)(3) of G.S. 105-335 and the appraised

valuations of locally assigned rolling stock in accordance with subdivision (c)(1) of G.S.

105-335, the Department of Revenue shall assign those appraised valuations to the taxing units

in which such properties are situated by certifying the valuations to the appropriate counties and

municipalities. Each local taxing unit receiving such certified valuations shall assess them at the

figures certified and shall tax the assessed valuations at the rate of tax levied against other

property subject to taxation therein. (1939, c. 310, s. 1610; 1971, c. 806, s. 1; 1973, c. 476, s.

193; c. 695, s. 18.)


2015) Certification of appraised valuations of nonsystem property and locally

assigned rolling stock, tangible personal property of tower aggregator

companies, and tangible personal property of mobile telecommunications

companies.

Having determined the appraised valuations of the nonsystem properties of public service

companies in accordance with subdivisions (b)(2) and (b)(3) of G.S. 105-335 and the appraised

valuations of locally assigned rolling stock in accordance with subdivision (c)(1) of G.S.

105-335, the appraised valuations of the tangible personal property of tower aggregator

companies in accordance with G.S. 105-336(d) and the appraised valuations of the tangible

personal property of mobile telecommunications companies in accordance with G.S. 105-336(c)

and (d), the Department of Revenue shall assign those appraised valuations to the taxing units in

which such properties are situated by certifying the valuations to the appropriate counties and




193; c. 695, s. 18; 2014-3, s. 11.1(f); 2015-6, s. 2.17(b).)

§ 105-339.1: Repealed by Session Laws 2015-6, s. 2.17(c), effective April 9, 2015.

§ 105-340. Certification of appraised valuations of railroad companies.

(a) Having determined the appraised valuation of the "nondistributable" system property

of a railroad company, the Department of Revenue shall assign the valuations for taxation to the

local taxing units in which such property is situated in the same manner as is provided for

nonsystem property in G.S. 105-339.

(b) Having determined the appraised valuation of the "distributable" system property of a

railroad company and having allocated the valuations in accordance with G.S. 105-338(b)(1), the

Department of Revenue shall then certify the amounts of those allocations to the local taxing

units to which such amounts are due in accordance with the provisions of G.S. 105-341.

(c) Each local taxing unit receiving certified valuations in accordance with this section

shall assess them at the figures certified and shall tax the assessed valuations at the rate of tax

levied against other property subject to taxation therein. (1939, c. 310, s. 1620; 1971, c. 806, s. 1;

1973, c. 476, s. 193; c. 695, s. 19.)


§ 105-341. Certification of public service company system appraised valuations.

Having determined the appraised valuations of public service company system property in

accordance with subdivision (b)(1) of G.S. 105-335 and having allocated the valuations in

accordance with G.S. 105-338(b)(2) and (3), the Department of Revenue shall assign each local

taxing unit's appraised valuations by certifying them to the appropriate counties and




193; c. 695, s. 20.)

§ 105-342. Notice, hearing, and appeal.

(a) Right to Information. – Upon written request to the Department of Revenue, any

public service company whose property values are subject to appraisal, apportionment, and

allocation for purposes of taxation under this Article shall be entitled to be informed of the

elements that the Department considered in the appraisal of the company's property, the result in

dollars produced by each element (including the methods and mathematical calculations used in

determining those results), the specific factors and ratios the Department used in apportioning the

appraised valuation of the company's property to this State, and the factors and the specific

mathematical calculations the Department used in allocating the company's valuation among the

local taxing units of this State. Upon written request to the Department of Revenue, any local

taxing unit in this State shall be entitled to the same information with regard to any public

service company whose property values are subject to appraisal, apportionment, and allocation

for purposes of taxation under this Article.

(b) Appraisal and Apportionment Review. – The appraised valuation of public service

company's property and the share thereof apportioned for taxation in this State under G.S.

105-335, 105-336, and 105-337 shall be deemed tentative figures until the provisions of this

subsection (b) have been complied with. As soon as practicable after the tentative figures

referred to in the preceding sentence have been determined, the Department of Revenue shall

give the taxpayer written notice of the proposed figures and shall state in the notice that the

taxpayer shall have 20 days after the date on which the notice was mailed in which to submit a

written request to the Property Tax Commission for a hearing on the tentative appraisal or

apportionment or both. If a timely request for a hearing is not made, the tentative figures shall

become final and conclusive at the close of the twentieth day after the notice was mailed. If a

timely request is made, the Property Tax Commission shall fix a date and place for the requested

hearing and give the taxpayer at least 20 days' written notice thereof. The hearing shall be

conducted under the provisions of subsection (d), below.


(d) Hearing and Appeal. – At any hearing under this section, the Property Tax

Commission shall hear all evidence and affidavits offered by the taxpayer and may exercise the

authority granted by G.S. 105-290(d) to obtain information pertinent to decision of the issue. The

Commission shall make findings of fact and conclusions of law and issue an order embodying its

decision. As soon as practicable thereafter, the Commission shall serve a written copy of its

decision upon the taxpayer by personal service or by registered or certified mail, return receipt

requested. (1971, c. 806, s. 1; 1973, c. 476, s. 193; 1979, c. 584, s. 2; c. 665, s. 1; 1985, c. 601, s.

4; 1987 (Reg. Sess., 1988), c. 1052, s. 1.)


§ 105-343. Penalty for failure to make required reports.

Any public service company which fails or refuses to prepare and deliver to the Department

of Revenue any report required by this Article shall forfeit and pay to the State of North Carolina

one hundred dollars ($100.00) for each day the report is delayed beyond the date on which it is

required to be submitted. This penalty may be recovered in an action in the appropriate division

of the General Court of Justice of Wake County in the name of the State on the relation of the

Secretary of Revenue. When collected, the penalty shall be paid into the general fund of the

State. The Secretary shall have the power to reduce or waive the penalty provided in this section

for good cause. (1939, c. 310, s. 1606; 1971, c. 806, s. 1; 1973, c. 476, s. 193.)

§ 105-344. Failure to pay tax; remedies; penalty.

If any public service company fails or refuses to pay any taxes imposed on its property by

any taxing unit of this State, the taxing unit may bring an action in the appropriate division of the

General Court of Justice of the county in which the taxing unit is located for the recovery of the

tax. Not less than 15 days before such an action is instituted, the taxing unit shall notify the

taxpayer by registered or certified mail of its intention to bring the action. The judgment

rendered in such an action shall include the tax imposed and unpaid and, as an additional tax, a

penalty of fifty percent (50%) of the amount of the tax with interest on the sum of these taxes at

the rate of nine percent (9%) per annum from the date the tax was due to be paid, plus reasonable

attorneys' fees for the prosecution of the action to be fixed by the court. (The awarding of

attorneys' fees by the court shall not prevent the taxing unit from paying its attorney an

additional fee pursuant to contract, nor shall it prevent the taxing unit from requiring that the

attorneys' fees awarded by the court be paid into the general fund of the taxing unit in accordance

with any arrangement between the taxing unit and its attorneys.) The judgment rendered by the

court may include a mandamus ordering the payment of the judgment, penalty, interest, and costs

including the attorneys' fees as part of the costs.

If, during the pendency of an action brought under this section, additional or subsequent

taxes shall accrue, those taxes, together with penalties and interest, may be included in the

judgment if, prior to rendition of the judgment, the tax collector of the taxing unit files with the

court a certificate of the additional taxes, penalties, and interest.

In any action brought under this section, the appraised valuation of the taxpayer's property as

determined, allocated, and certified to the taxing unit by the Department of Revenue shall be

conclusive and shall not be subject to collateral attack. (1939, c. 310, s. 1611; 1971, c. 806, s. 1;

c. 931, s. 1; 1973, c. 476, s. 193.)

Article 24.

Review and Enforcement of Orders.

§ 105-345. Right of appeal; filing of exceptions.

(a) No party to a proceeding before the Property Tax Commission may appeal from any

final order or decision of the Commission unless within 30 days after the entry of such final

order or decision the party aggrieved by such decision or order shall file with the Commission

notice of appeal and exceptions which shall set forth specifically the ground or grounds on which

the aggrieved party considers said decision or order to be unlawful, unjust, unreasonable or

unwarranted, and including errors alleged to have been committed by the Commission.


(b) Any party may appeal from all or any portion of any final order or decision of the

Commission in the manner herein provided. Copy of the notice of appeal shall be mailed by the

appealing party at the time of filing with the Commission, to each party to the proceeding to the

addresses as they appear in the files of the Commission in the proceeding. The failure of any

party, other than the Commission, to be served with or to receive a copy of the notice of appeal

shall not affect the validity or regularity of the appeal.

(c) The Commission may on motion of any party to the proceeding or on its own motion

set the exceptions to the final order upon which such appeal is based for further hearing before

the Commission.

(d) The appeal shall lie to the Court of Appeals as provided in G.S. 7A-29. The procedure

for the appeal shall be as provided by the rules of appellate procedure.

(e) The Court of Appeals shall hear and determine all matters arising on such appeal, as

in this Article provided, and may in the exercise of its discretion assign the hearing of said appeal

to any panel of the Court of Appeals. (1979, c. 584, s. 3; 1983, c. 565.)

§ 105-345.1. No evidence admitted on appeal; remission for further evidence.

No evidence shall be received at the hearing on appeal to the Court of Appeals but if any

party shall satisfy the court that evidence has been discovered since the hearing before the

Property Tax Commission that could not have been obtained for use at that hearing by the

exercise of reasonable diligence, and will materially affect the merits of the case, the court may,

in its discretion, remand the record and proceedings to the Commission with directions to take

such subsequently discovered evidence, and after consideration thereof, to make such order as

the Commission may deem proper, from which order an appeal shall lie as in the case of any

other final order from which an appeal may be taken as provided in G.S. 105-345. (1979, c. 584,

s. 3.)

§ 105-345.2. Record on appeal; extent of review.

(a) On appeal the court shall review the record and the exceptions and assignments of

error in accordance with the rules of appellate procedure, and any alleged irregularities in

procedures before the Property Tax Commission, not shown in the record, shall be considered

under the rules of appellate procedure.

(b) So far as necessary to the decision and where presented, the court shall decide all

relevant questions of law, interpret constitutional and statutory provisions, and determine the

meaning and applicability of the terms of any Commission action. The court may affirm or

reverse the decision of the Commission, declare the same null and void, or remand the case for

further proceedings; or it may reverse or modify the decision if the substantial rights of the

appellants have been prejudiced because the Commission's findings, inferences, conclusions or

decisions are:

(1) In violation of constitutional provisions; or

(2) In excess of statutory authority or jurisdiction of the Commission; or

(3) Made upon unlawful proceedings; or

(4) Affected by other errors of law; or

(5) Unsupported by competent, material and substantial evidence in view of the

entire record as submitted; or

(6) Arbitrary or capricious.


(c) In making the foregoing determinations, the court shall review the whole record or

such portions thereof as may be cited by any party and due account shall be taken of the rule of

prejudicial error. The appellant shall not be permitted to rely upon any grounds for relief on

appeal which were not set forth specifically in his notice of appeal filed with the Commission.

(1979, c. 584, s. 3.)

§ 105-345.3. Relief pending review on appeal.

Pending judicial review, the Property Tax Commission is authorized, where it finds that

justice so requires, to postpone the effective date of any action taken by it. Upon such conditions

as may be required and to the extent necessary to prevent irreparable injury, a judge of the Court

of Appeals is authorized to issue all necessary and appropriate process to postpone the effective

date of any action by the Commission or take such action as may be necessary to preserve status

or rights of any of the parties pending conclusion of the proceedings on appeal. The court may

require the applicant for such stay to post adequate bond as required by the court. (1979, c. 584,

s. 3.)

§ 105-345.4. Appeal to Supreme Court.

In all appeals heard in the Court of Appeals, any party may file a motion for review in the

Supreme Court of the decision of the Court of Appeals under G.S. 7A-31, and in cases entitled to

be appealed as a matter of right under G.S. 7A-30(3) any party may appeal to the Supreme Court

from the decision of the Court of Appeals under the same rules and regulations as are prescribed

by law for appeals, and such court may advance the cause on its docket. (1979, c. 584, s. 3.)

§ 105-345.5. Judgment on appeal enforced by mandamus.

In all cases in which, upon appeal, an order or decision of the Property Tax Commission is

affirmed, in whole or in part, the appellate court may include in its decree a mandamus to the

appropriate party to put said order in force, or so much thereof as shall be affirmed, or the

appellate court may make such other order as it deems appropriate. (1979, c. 584, s. 3.)

§ 105-346. Peremptory mandamus to enforce order when no appeal.

(a) If no appeal is taken from an order or decision of the Property Tax Commission

within the time prescribed by law and the person to which the order or decision is directed fails

to put the same in operation, as therein required, the Commission may apply to the judge

regularly assigned to the superior court district which includes Wake County, or to the resident

judge of said district at chambers upon 10 days' notice, for a peremptory mandamus upon said

person for the putting in force of said order or decision; and if said judge shall find that the order

of said Commission was valid and within the scope of its powers, he shall issue such peremptory

mandamus.

(b) An appeal shall lie to the Court of Appeals in behalf of the Commission, or the

defendant, from the refusal or the granting of such peremptory mandamus. The remedy

prescribed in this section for enforcement of orders of the Commission is in addition to other

remedies prescribed by law. (1979, c. 584, s. 3.)

Article 25.

Levy of Taxes and Presumption of Notice.


§ 105-347. Levy of property taxes.

Each year – not later than the date prescribed by applicable law or, in the absence of specific

statutory provisions, not later than the first day of August – the tax levying authorities of

counties and municipalities shall levy on property rates of taxes, not exceeding any constitutional

or statutory limits, necessary to meet the general and other legally authorized expenses of the

taxing units. (1939, c. 310, s. 1400; 1971, c. 806, s. 1.)

§ 105-348. All interested persons charged with notice of taxes.

All persons who have or who may acquire any interest in any real or personal property that

may be or may become subject to a lien for taxes are hereby charged with notice that such

property is or should be listed for taxation, that taxes are or may become a lien thereon, and that

if taxes are not paid the proceedings allowed by law may be taken against such property. This

notice shall be conclusively presumed, whether or not such persons have actual notice. (1939, c.

310, s. 1705; 1971, c. 806, s. 1.)

Article 26.

Collection and Foreclosure of Taxes.

§ 105-349. Appointment, term, qualifications, and bond of tax collectors and deputies.

(a) Appointment and Term. – The governing body of each county and municipality shall

appoint a tax collector on or before July 1, 1971, to serve for a term to be determined by the

appointing body and until his successor has been appointed and qualified. Until the first such

appointments are made, county and municipal taxes shall be collected by the tax collectors

presently serving under prior provisions of law. The governing body may remove the tax

collector from office during his term for good cause after giving him notice in writing and an

opportunity to appear and be heard at a public session of the governing body. No hearing shall be

required, however, if the tax collector is removed for failing to meet the prerequisites prescribed

by G.S. 105-352(b) for delivery of the tax receipts. Unless otherwise provided by G.S. 105-373,

whenever any vacancy occurs in this office, the governing body shall appoint a qualified person

to serve as tax collector for the period of the unexpired term.

(b) Qualifications. – The governing body shall appoint as tax collector a person of

character and integrity whose experience in business and collection work is satisfactory to the

governing body.

(c) Bond. – No tax collector shall be allowed to begin his duties until he shall have

furnished bond conditioned upon his honesty and faithful performance in such amount as the

governing body may prescribe. A tax collector shall not be permitted to collect any taxes not

covered by his bond, nor shall a tax collector be permitted to continue collecting taxes after his

bond has expired without renewal.

(d) Compensation. – The compensation and expense allowances of the tax collector shall

be fixed by the governing body.

(e) Alternative to Separate Office of Tax Collector. – Pursuant to Article VI, Sec. 9, of

the North Carolina Constitution, the office of tax collector is hereby declared to be an office that

may be held concurrently with any appointive or elective office other than those hereinafter

designated, and the governing body may appoint as tax collector any appointive or elective

officer who meets the personal and bonding requirements established by this section. A member

of the governing body of a taxing unit may not be appointed tax collector, nor may the duties of


the office be conferred upon him. A person appointed or elected as the treasurer or chief

accounting officer of a taxing unit may not be appointed tax collector, nor may the duties of the

office of tax collector be conferred upon him except with the written permission of the secretary

of the Local Government Commission who, before giving his permission, shall satisfy himself

that the unit's internal control procedures are sufficient to prevent improper handling of public

funds.

(f) Deputy Tax Collectors. – The governing body of a county or municipality is

authorized to appoint one or more deputy tax collectors and to establish their terms of office,

compensation, and bonding requirements. A deputy tax collector shall have authority to perform,

under the direction of the tax collector, any act that the tax collector may perform unless the

governing body appointing the deputy specifically limits the scope of the deputy's authority.

(g) Oath. – Every tax collector and deputy tax collector, as the holder of an office, shall

take the oath required by Article VI, § 7 of the North Carolina Constitution with the following

phrase added to it: "that I will not allow my actions as tax collector to be influenced by personal

or political friendships or obligations,". The oath must be filed with the clerk of the governing

body of the taxing unit. (1939, c. 310, ss. 1701, 1702; 1957, c. 537; 1971, c. 806, s. 1; 1991, c.

110, s. 6; 1991 (Reg. Sess., 1992), c. 1007, s. 23.)

§ 105-350. General duties of tax collectors.

It shall be the duty of each tax collector:

(1) To employ all lawful means to collect all property, dog, license, privilege, and

franchise taxes with which he is charged by the governing body.

(2) To give such bond as may be required of him by the governing body under the

provisions of G.S. 105-349.

(3) To perform such duties in connection with the preparation of the tax records

and tax receipts as the governing body may direct under the provisions of G.S.

105-319 and 105-320.

(4) To keep adequate records of all collections he makes.

(5) To account for all moneys coming into his hands in such form and detail as

may be required by the chief accounting officer of the taxing unit.

(6) To make settlement at the times required by G.S. 105-373 and at any other

time the governing body may require him to do so.

(7) To submit to the governing body at each of its regular meetings a report of the

amount he has collected on each year's taxes with which he is charged, the

amount remaining uncollected, and the steps he is taking to encourage or

enforce payment of uncollected taxes.

(8) To send bills or notices of taxes due to taxpayers if instructed to do so by the

governing body.

(9) To visit delinquent taxpayers to encourage payment of taxes if instructed to

do so by the governing body. (1939, c. 310, s. 1703; 1971, c. 806, s. 1.)

§ 105-351. Authority of successor collector.

The successor in office of any tax collector may continue and complete any legally

authorized process or proceeding begun by his predecessor for the collection of taxes. (1939, c.

310, s. 1703; 1971, c. 806, s. 1.)


§ 105-352. Delivery of tax receipts to tax collector; prerequisites; procedure upon default.

(a) Time of Delivery. – As provided in G.S. 105-321, upon order of the governing body,

the tax receipts shall be delivered to the tax collector on or before the first day of September.

(b) Settlement, Bond, and Prepayments. – Before the tax receipts for the current year are

delivered to the tax collector, he shall have:

(1) Delivered to the chief accounting officer of the taxing unit the duplicate

receipts issued for prepayments received by the tax collector.

(2) Demonstrated to the satisfaction of the chief accounting officer that all

moneys received by the tax collector as prepayments have been deposited to

the credit of the taxing unit.

(3) Made his annual settlement (as defined in G.S. 105-373) for all taxes in his

hands for collection.

(4) Provided bond or bonds as required by G.S. 105-349(c) for taxes for the

current year and all prior years in his hands for collection. (In no event shall

the governing body accept a bond of lesser amount than that prescribed by any

local act applying to the taxing unit.)

In the event prepayments have been received by a person other than the regular tax collector, that

person shall, before the tax receipts are delivered to the tax collector, deliver the prepayment

receipt duplicates to the chief accounting officer and demonstrate to the satisfaction of that

officer that all moneys received by him as prepayments have been deposited to the credit of the

taxing unit. If the chief accounting officer has accepted prepayments, he shall not later than the

day on which the tax receipts are delivered to the tax collector, make settlement with the

governing body in such manner and form as the governing body may prescribe.

(c) Procedure upon Default. – If, when the tax receipts for the current year have been

computed and prepared, the regular tax collector shall not have met the requirements of

subsection (b), above, the governing body shall immediately appoint a special tax collector and,

after he has given satisfactory bond for the full amount of the taxes as required by G.S.

105-349(c), deliver to him the tax receipts for the current year and order him to make collections

as provided in G.S. 105-321. In the discretion of the governing body, the cost of the special tax

collector's bond and compensation may be deducted from the compensation of the regular tax

collector. If the regular tax collector shall thereafter meet the requirements of subsection (b),

above, the special collector shall make full settlement (in the manner provided in G.S. 105-373

for tax collectors retiring from office), and the governing body, as provided in G.S. 105-321,

shall deliver the tax receipts for the current year to the regular tax collector and order their

collection.

(d) Civil and Criminal Penalties. –

(1) Any member of the governing body who shall vote to deliver the tax receipts

to a tax collector before the tax collector has met the requirements prescribed

by this section shall be individually liable for the amount of taxes charged

against the tax collector for which he has not made satisfactory settlement;

and any member of the governing body who so votes, or who willfully fails to

perform any duty imposed by this section, shall be guilty of a Class 1

misdemeanor.

(2) Any tax collector or other official who fails to account for prepayments as

prescribed by this section shall be guilty of a Class 1 misdemeanor. (1939, c.


310, s. 1707; 1971, c. 806, s. 1; 1993, c. 539, s. 722; 1994, Ex. Sess., c. 24, s.

14(c).)

§ 105-353. Place for collection of taxes.

Taxes shall be payable at the office of the tax collector or at a financial institution with which

the taxing unit has contracted for receipt of payment of taxes. For the convenience of taxpayers,

the governing body may require the tax collector to be present to collect taxes in person or by

deputy at other designated places within the taxing unit at times prescribed by the governing

body. If the governing body exercises this authority, the tax collector shall give timely notice of

the places and times at which he will be present for collection; this notice shall be published in a

newspaper having general circulation in the taxing unit and posted at three or more public places

within the taxing unit. (1939, c. 310, s. 1712; 1971, c. 806, s. 1; 1989, c. 578, s. 2.)

§ 105-354. Collections for districts and other units of local government.

Whenever a taxing unit collects taxes for some district or other unit of local government,

those taxes, for collection and foreclosure purposes, shall be treated as taxes of the taxing unit

making the collection. (1971, c. 806, s. 1.)

§ 105-355. Creation of tax lien; date as of which lien attaches.

(a) Lien on Real Property. – Regardless of the time at which liability for a tax for a given

fiscal year may arise or the exact amount thereof be determined, the lien for taxes levied on a

parcel of real property shall attach to the parcel taxed on the date as of which property is to be

listed under G.S. 105-285, and the lien for taxes levied on personal property shall attach to all

real property of the taxpayer in the taxing unit on the same date. All penalties, interest, and costs

allowed by law shall be added to the amount of the lien and shall be regarded as attaching at the

same time as the lien for the principal amount of the taxes. For purposes of this subsection (a):

(1) Taxes levied on real property listed in the name of a life tenant under G.S.

105-302 (c)(8) shall be a lien on the fee as well as the life estate.

(2) Taxes levied on improvements on or separate rights in real property owned by

one other than the owner of the land, whether or not listed separately from the

land under G.S. 105-302 (c)(11), shall be a lien on both the improvements or

rights and on the land.

(b) Lien on Personal Property. – Taxes levied on real and personal property (including

penalties, interest, and costs allowed by law) shall be a lien on personal property from and after

levy or attachment and garnishment of the personal property levied upon or attached. (1939, c.

310, s. 1704; 1971, c. 806, s. 1; 1973, c. 564, s. 4.)

§ 105-356. Priority of tax liens.

(a) On Real Property. – The lien of taxes imposed on real and personal property shall

attach to real property at the time prescribed in G.S. 105-355(a). The priority of that lien shall be

determined in accordance with the following rules:

(1) Subject to the provisions of the Revenue Act prescribing the priority of the

lien for State taxes, the lien of taxes imposed under the provisions of this

Subchapter shall be superior to all other liens, assessments, charges, rights,

and claims of any and every kind in and to the real property to which the lien


for taxes attaches regardless of the claimant and regardless of whether

acquired prior or subsequent to the attachment of the lien for taxes.

(2) The liens of taxes of all taxing units shall be of equal dignity.

(3) The priority of the lien for taxes shall not be affected by transfer of title to the

real property after the lien has attached, nor shall it be affected by the death,

receivership, or bankruptcy of the owner of the real property to which the lien

attaches.

(b) On Personal Property. – The lien of taxes on real and personal property shall attach to

personal property at the time prescribed in G.S. 105-355(b). The priority of that lien shall be

determined in accordance with the following rules:

(1) The tax lien, when it attaches to personal property, shall, insofar as it

represents taxes imposed upon the property to which the lien attaches, be

superior to all other liens and rights whether such other liens and rights are

prior or subsequent to the tax lien in point of time.

(2) The tax lien, when it attaches to personal property, shall, insofar as it

represents taxes imposed upon property other than that to which the lien

attaches, be inferior to prior valid liens and perfected security interests and

superior to all subsequent liens and security interests.

(3) As between the tax liens of different taxing units, the tax lien first attaching

shall be superior. (1939, c. 310, s. 1704; 1971, c. 806, s. 1.)

§ 105-357. Payment of taxes.

(a) Medium of Payment. – Taxes shall be payable in existing national currency. Deeds to

real property, notes of the taxpayer or others, bonds or notes of the taxing unit, and payments in

kind shall not be accepted in payment of taxes. A taxing unit may not permit the payment of

taxes by offset of any bill, claim, judgment, or other obligation owed to the taxpayer by the

taxing unit. The prohibition against payment of taxes by offset does not apply to offset of an

obligation arising from a lease or another contract entered into between the taxpayer and the

taxing unit before July 1 of the fiscal year for which the unpaid taxes were levied.

(b) Acceptance of Checks and Electronic Payment. – The tax collector may accept

checks and electronic payments, as defined in G.S. 147-86.20, in payment of taxes, as authorized

by G.S. 159-32.1. Acceptance of a check or electronic payment is at the tax collector's own risk.

A tax collector who accepts electronic payment of taxes may add a fee to each electronic

payment transaction to offset the service charge the taxing unit pays for electronic payment

service. A tax collector who accepts electronic payment or check in payment of taxes may issue

the tax receipt immediately or withhold the receipt until the check has been collected or the

electronic payment invoice has been honored by the issuer.

If a tax collector accepts a check or an electronic payment and issues a tax receipt and the

check is returned unpaid (without negligence on the part of the tax collector in presenting the

check for payment) or the electronic payment invoice is not honored by the issuer, the taxes for

which the check or electronic payment was given shall be deemed unpaid; the tax collector shall

immediately correct the copy of the tax receipt and other appropriate records to show the fact of

nonpayment, and shall give written notice by certified or registered mail to the person to whom

the tax receipt was issued to return it to the tax collector. After correcting the records to show the

fact of nonpayment, the tax collector shall proceed to collect the taxes by the use of any remedies


allowed for the collection of taxes or by bringing a civil action on the check or electronic

payment.

A financial institution with which a taxing unit has contracted for receipt of payment of taxes

may accept a check in payment of taxes. If the check is honored, the financial institution shall so

notify the tax collector, who shall, upon request of the taxpayer, issue a receipt for payment of

the taxes. If the check is returned unpaid, the financial institution shall so notify the tax collector,

who shall proceed to collect the taxes by use of any remedy allowed for collection of taxes or by

bringing a civil action on the check.

(1) Effect on Tax Lien. – If the tax collector accepts a check or electronic

payment in payment of taxes on real property and issues the receipt, and the

check is later returned unpaid or the electronic payment invoice is not honored

by the issuer, the taxing unit's lien for taxes on the real property shall be

inferior to the rights of purchasers for value and of persons acquiring liens of

record for value if the purchasers or lienholders acquire their rights in good

faith and without actual knowledge that the check has not been collected or

the electronic payment invoice has not been honored, after examination of the

copy of the tax receipt in the tax collector's office during the time that record

showed the taxes as paid or after examination of the official receipt issued to

the taxpayer prior to the date on which the tax collector notified the taxpayer

to return the receipt.

(2) Penalty. – In addition to interest for nonpayment of taxes provided by G.S.

105-360 and in addition to any criminal penalties provided by law, the penalty

for presenting in payment of taxes a check or electronic funds transfer that is

returned or not completed because of insufficient funds or nonexistence of an

account of the drawer or transferor is twenty-five dollars ($25.00) or ten

percent (10%) of the amount of the check or electronic invoice, whichever is

greater, subject to a maximum of one thousand dollars ($1,000). This penalty

does not apply if the tax collector finds that, when the check or electronic

funds transfer was presented for payment, the drawer of the check or

transferor of funds had sufficient funds in an account at a financial institution

in this State to make the payment and, by inadvertence, the drawer of the

check or transferor of the funds failed to draw the check or initiate a transfer

on the account that had sufficient funds. This penalty shall be added to and

collected in the same manner as the taxes for which the check or electronic

payment was given.

(c) Small Underpayments and Overpayments. – The governing body of a taxing unit

may, by resolution, permit its tax collector to treat small underpayments of taxes as fully paid

and to not refund small overpayments of taxes unless the taxpayer requests a refund before the

end of the fiscal year in which the small overpayment is made. A "small underpayment" is a

payment made, other than in person, that is no more than one dollar ($1.00) less than the taxes

due on a tax receipt. A "small overpayment" is a payment made, other than in person, that is no

more than one dollar ($1.00) greater than the taxes due on a tax receipt.

The tax collector shall keep records of all underpayments and overpayments of taxes by

receipt number and amount and shall report these payments to the governing body as part of his

settlement.


A resolution authorizing adjustments of underpayments and overpayments as provided in this

subsection shall:

(1) Be adopted on or before June 15 of the year to which it is to apply;

(2) Apply to taxes levied for all previous fiscal years; and

(3) Continue in effect until repealed or amended by resolution of the taxing unit.

(1939, c. 310, s. 1710; 1971, c. 806, s. 1; 1987, c. 661; 1989, c. 578, s. 3; 1989

(Reg. Sess., 1990), c. 1005, s. 8; 1991, c. 584, s. 2; 1999-434, s. 6; 2001-487,

s. 25; 2002-156, s. 1; 2005-134, s. 1; 2005-313, s. 10.)

§ 105-358. Waiver of penalties; partial payments.

(a) Waiver. – A tax collector may, upon making a record of the reasons therefor, reduce

or waive the penalty imposed on giving a worthless check under G.S. 105-357(b)(2).

(b) Partial Payments. – Unless otherwise directed by the governing body, the tax

collector shall accept partial payments on taxes and issue partial payment receipts therefor.

When a payment is made on the tax for any year or on any installment, it shall first be

applied to accrued penalties, interest, and costs and then to the principal amount of the tax or

installment. In its discretion, the governing body may prescribe by uniform regulation the

minimum amount or percentage of tax liability that may be accepted as a partial payment. (1939,

c. 310, ss. 1708, 1709; 1971, c. 806, s. 1; 2002-156, s. 1.2; 2003-416, s. 10.)

§ 105-359. Prepayments.

(a) To Whom Made. – Payments of taxes made before the tax receipts have been

delivered to the tax collector, herein referred to as prepayments, shall be made to the regular tax

collector unless the governing body shall have designated some other person to receive them.

The regular tax collector or person named to receive prepayments shall give bond satisfactory to

the governing body.

(b) When Accepted. – No taxing unit shall be required to accept any tender of

prepayment until the annual budget estimate has been filed as required by law.

(c) Estimation of Liability; Overpayment and Underpayment. – If the tax rate has not

been finally fixed or if the assessed valuation of the taxpayer's property has not been finally

determined at the time a prepayment is tendered, the tax collector shall compute the amount of

the tax liability on the basis of the best information available to him. If it is later ascertained that

there has been an overpayment, the excess (without interest) shall be refunded by the taxing unit.

If it is later ascertained that there was an underpayment, the unpaid balance of the tax shall be

due, and the balance due shall be allowed the discount or charged the interest in effect with

respect to taxes for the same year at the time the balance is paid.

(d) Receipts. – A receipt issued for a prepayment made on the basis of an estimate of the

tax rate or assessed valuation shall so state, and such a receipt shall not release property from the

tax lien created by G.S. 105-355(a). An official and final receipt shall be made available to the

taxpayer as soon as possible after determination that the tax has been fully paid.

(e) Duties of Chief Accounting Officer. – It shall be the duty of the chief accounting

officer of the taxing unit to:

(1) Secure and retain in his office, available to taxpayers upon request, the official

receipts for taxes paid in full by prepayment.

(2) Credit on the tax receipts to be delivered to the tax collector all taxes that have

been paid in full or in part by prepayment.


(3) Prepare and deliver refunds for overpayments made by way of prepayment.

(4) Reduce the charge to be made against the tax collector by deducting from the

total amount of taxes levied so much of the amount received as prepayments

as is not required to be refunded under the provisions of subsection (c), above.

Any chief accounting officer who fails to perform the duties imposed upon him by this

subsection (e) shall be guilty of a Class 1 misdemeanor. (1939, c. 310, ss. 1706, 1707; 1969, c.

921, s. 2; 1971, c. 806, s. 1; 1993, c. 539, s. 723; 1994, Ex. Sess., c. 24, s. 14(c).)

§ 105-360. Due date; interest for nonpayment of taxes; discounts for prepayment; interest

on overpayment of tax.

(a) Taxes levied under this Subchapter by a taxing unit are due and payable on

September 1 of the fiscal year for which the taxes are levied. Taxes are payable at par or face

amount if paid before January 6 following the due date. Taxes paid on or after January 6

following the due date are subject to interest charges. Interest accrues on taxes paid on or after

January 6 as follows:

(1) For the period January 6 to February 1, interest accrues at the rate of two

percent (2%).

(2) For the period February 1 until the principal amount of the taxes, the accrued

interest, and any penalties are paid, interest accrues at the rate of three-fourths

of one percent (3/4%) a month or fraction thereof.

(b) Repealed by Session Laws 1987, c. 93, s. 2.

(c) Under the conditions established by this subsection (c), the governing body of any

county or municipality levying taxes under the provisions of this Subchapter shall have authority

to establish a schedule of discounts to be applied to taxes paid prior to the due date prescribed in

subsection (a) above. To exercise this authority, the governing body shall:

(1) Not later than the first day of May preceding the due date of the taxes to

which it first applies, adopt a resolution or ordinance specifying the amounts

of the discounts and the periods of time during which they are to be

applicable.

(2) Submit the resolution or ordinance to the Department of Revenue for

approval.

(3) Upon approval by the Department of Revenue, publish the discount schedule

at least once in some newspaper having general circulation in the taxing unit.

When such a resolution or ordinance is submitted to the Department of Revenue, the Department

may approve it or disapprove it in whole or in part if, in the opinion of the Department, the

discounts or the periods of time for which discounts are allowed are excessive or unreasonable.

Such a resolution or ordinance, once adopted and approved by the Department of Revenue, shall

continue in effect until repealed. Nothing in this subsection (c) shall prevent the governing body

of any taxing unit from providing by resolution that the schedule of discounts for prepayment of

taxes in effect in the taxing unit on June 30, 1971, shall continue in effect through November 1,

1971, but no longer.

(d) For the purposes of computing discounts and interest, tax payments submitted by mail

shall be deemed to be received as of the date shown on the postmark affixed by the United States

Postal Service. If no date is shown on the postmark or if the postmark is not affixed by the

United States Postal Service, the tax payment shall be deemed to be received when the payment


is received in the office of the tax collector. In any dispute arising under this subsection, the

burden of proof shall be on the taxpayer to show that the payment was timely made.

(e) When an order of the county board of equalization and review reduces the valuation

of property or removes the property from the tax lists and, based on the order, the taxpayer has

paid more tax than is due on the property, the taxpayer is entitled to receive interest on the

overpayment in accordance with this subdivision. An overpayment of tax bears interest at the

rate set under subsection (a) of this section from the date the interest begins to accrue until a

refund is paid. Interest accrues from the later of the date the tax was paid and the date the tax

would have been considered delinquent under G.S. 105-360. A refund is considered paid on a

date determined by the governing body of the taxing unit that is no sooner than five days after a

refund check is mailed. (1939, c. 310, s. 1403; 1943, c. 667; 1945, c. 247, s. 3; c. 1041; 1947, c.

888, s. 1; 1969, c. 921, s. 1; 1971, c. 806, s. 1; 1973, c. 476, s. 193; 1977, c. 327, s. 2; c. 630;

1979, c. 233, ss. 1, 2; 1987, c. 93, ss. 1, 2; 2008-35, s. 2.7; 2011-3, s. 3(a).)

§ 105-361. Statement of amount of taxes due.

(a) Duty to Furnish a Certificate. – On the request of a person who is listed in subdivision

(1) of this subsection and who complies with subdivision (2) of this subsection, the tax collector

must give the person a written certificate stating the amount of any taxes and special assessments

owed for the current year and for any prior year and the amount of any deferred taxes and

interest that would become due if a disqualifying event occurred.

(1) Who may make request. – Any of the following persons may request the

certificate:

a. An owner of the real property.

b. An occupant of the real property.

c. A person having a lien on the real property.

d. A person having a legal interest or estate in the real property.

e. A person or firm having a contract to purchase or lease the property or

a person or firm having contracted to make a loan secured by the real

property.

f. The authorized agent or attorney of any person described in this

subdivision.

(2) Identification of property. – A person requesting a certificate with respect to

taxes must specify the name of the person who listed the real property for

taxation for each year for which the information is sought. A person

requesting a certificate with respect to assessments must identify the real

estate in the manner required by the tax collector.

(b) Reliance on the Certificate. – When a certificate has been issued as provided in

subsection (a), above, all taxes and special assessments that have accrued against the property for

the period covered by the certificate shall cease to be a lien against the property, except to the

extent of taxes and special assessments stated to be due in the certificate, as to all persons, firms,

and corporations obtaining such a certificate and their successors in interest who rely on the

certificate:

(1) By paying the amount of taxes and assessments stated therein to be a lien on

the real property;

(2) By purchasing or leasing the real property; or

(3) By lending money secured by the real property.


The tax collector shall be liable on his bond for any loss to the taxing unit arising from an

understatement of the tax and special assessment obligations in the preparation of a certificate

furnished under this section.

(c) Penalty. – Any tax collector who fails or refuses to furnish a certificate when

requested under the conditions prescribed in this section shall be liable for a penalty of fifty

dollars ($50.00) recoverable in a civil action by the person who made the request.

(d) Oral Statements. – An oral statement made by the tax collector as to the amount of

taxes, special assessments, penalties, interest, and costs due on any real or personal property shall

bind neither the tax collector nor the taxing unit.

(e) Internet. – If the taxing unit maintains an Internet web site on which current

information on the amount of taxes, special assessments, penalties, interest, and costs due on any

real or personal property is available, the governing body of the taxing unit may adopt an

ordinance to allow a person to rely on information obtained from the web site as if it were a

certificate issued pursuant to subsection (a) of this section. The ordinance may provide for

disclaimers to be posted on the web site containing language notifying the person relying on the

information contained in the web site about matters relevant to the information, such as the date

on which the information was posted, the date as of which the information is current, and any

special instructions and procedures for accessing the complete and accurate information. The

ordinance may also provide for appropriate procedural provisions by which the tax collector may

ensure full and accurate payment of all taxes, assessments, and obligations certified under this

subsection.

A person who relies on the web site information must keep and present a copy of the

information as necessary or appropriate, as if the copy were a certificate issued under subsection

(a) of this section. The tax collector shall be liable on the tax collector's bond for any loss to the

taxing unit arising from an understatement of the tax and special assessment obligations

contained in the information available on the web site unless the taxing unit's ordinance provides

the disclaimers authorized by this subsection. (1939, c. 310, s. 1711; 1971, c. 806, s. 1; 1973, c.

604; c. 1340; 2003-399, s. 1; 2009-445, s. 26.)

§ 105-362. Discharge of lien on real property.

(a) General Rule. – The tax lien on real property shall continue until the principal amount

of the taxes plus penalties, interest, and costs allowed by law have been fully paid.

(b) Release of Separate Parcels from Tax Lien. –

(1) When the lien of taxes of any taxing unit for any year attaches to two or more

parcels of real property owned by the same taxpayer, the lien may be

discharged as to any parcel at any time prior to advertisement of tax

foreclosure sale in accordance with either subdivision (b)(1)a or subdivision

(b)(1)b:

a. Upon payment, by or on behalf of the listing taxpayer, of the taxes for

the year on the parcel or parcels to be released, of the taxes for the year

on the parcel or parcels to be released, plus all personal property taxes

owed by the listing taxpayer for the same year.

b. Upon payment, by or on behalf of any person (other than the listing

taxpayer) who has a legal interest in the parcel or parcels to be

released, of the taxes for the year on the parcel or parcels to be

released, plus a proportionate part of personal property taxes owed by


the listing taxpayer for the same year. The proportionate part shall be a

percentage of the personal property taxes equal to the percentage of

the total assessed valuation of the taxpayer's real property in the taxing

unit represented by the assessed valuation of the parcel or parcels to be

released.

(2) When real property listed as one parcel is divided, a part thereof may be

released as provided in subdivision (b)(1), above, after the assessed valuation

of the part to be released has been determined and certified to the tax collector

by the tax supervisor.

(3) It shall be the duty of the tax collector accepting a payment made under this

subsection (b) for the purpose of releasing the tax lien from less than all of the

taxpayer's real property:

a. To give the person making the payment a receipt setting forth a

description of the real property released from the tax lien and bearing a

statement that such property is being released from the tax lien.

b. To indicate on the tax receipts, tax records, and other official records

of his office what real property has been released from the tax lien.

If the tax collector fails to issue the receipt or make the record entries

required by this subdivision (3), the omission may be supplied at any time.

(4) When any parcel of real property has been released under the provisions of

this subsection (b) from the lien of taxes of any taxing unit for any year, the

property shall not thereafter be subject to the lien of any other regularly levied

taxes of the same taxing unit for the same year, whether such other taxes be

levied against the listing owner of the property or against some other person

acquiring title thereto. No tax foreclosure judgment for such other taxes shall

become a lien on the released property; and, upon appropriate request and

satisfactory proof of the release by any interested person, the clerk of the

superior court shall indicate on the judgment docket that the judgment is not a

lien on the released property. However, the failure to make such an entry shall

not have the effect of making the judgment a lien on the released property.

(1939, c. 310, s. 1704; 1971, c. 806, s. 1.)

§ 105-363. Remedies of cotenants and joint owners of real property.

(a) Payment of Taxes on Share of One Cotenant. – Any one of several tenants in

common or joint tenants (other than copartners) of real property may pay that portion of the

taxes, interest, and costs that are a lien upon his undivided share of the property and thereby

release the tax lien from his share. Thereafter, in any partition sale of the property the share of

the joint owner who has paid his portion of the taxes shall be set apart free from the tax lien, and

his share of the proceeds of any sale shall not be diminished by disbursements to pay any taxes,

interest, or costs. In the event the tax lien is foreclosed and the property is sold for failure to pay

taxes, the share of any joint owner who has paid his portion of the taxes shall be excepted from

the advertisement and sale.

(b) Payment of Entire Amount of Taxes by One Cotenant. – Any one of several tenants in

common or joint tenants (other than copartners) of real property may pay the entire amount of

the taxes, interest, and costs constituting a lien on the property, and any amount so paid that is in

excess of his share of the taxes, interest, and costs and that was not paid through agreement with


or on behalf of the other joint owners shall constitute a lien in his favor upon the shares of the

other joint owners. Such a lien may be enforced in a proceeding for actual partition, a proceeding

for partition and sale, or by any other appropriate judicial proceeding. (1901, c. 558, ss. 13, 14,

47; Rev., s. 2860; C.S., s. 7983; 1971, c. 806, s. 1.)

§ 105-364. Collection of taxes outside the taxing unit.

(a) Duty of Governing Body. – It shall be the duty of the governing body of each taxing

unit to require reports from the tax collector at such times as it may prescribe (but not less

frequently than in connection with the tax collector's annual settlement) concerning the efforts he

has made to locate taxpayers who have removed from the taxing unit, the efforts he has made to

locate personal property in other taxing units belonging to delinquent taxpayers, and the efforts

he has made under the provisions of this section to collect taxes.

(b) Duty to Certify Unpaid Taxes. – If a taxpayer has no personal property or real

property subject to the tax lien in the taxing unit but does have personal property in some other

taxing unit in this State, or if a taxpayer has removed from the taxing unit, leaving no personal

property or real property subject to the tax lien there, and is known to be in some other taxing

unit in this State, the tax collector shall forward the tax receipt (with a certificate stating that the

taxes are unpaid) for collection to the tax collector of the taxing unit in which the taxpayer is

known to have personal property or in which he is known to be. The tax collector may not,

however, certify an unpaid tax receipt to another taxing unit if 10 years have elapsed since the

date the unpaid taxes became due.

(c) Effect of Certificate; Duty of Receiving Tax Collector. – In the hands of the tax

collector receiving them, the copy of the tax receipt and the certificate of nonpayment shall have

the force and effect of an unpaid tax receipt of his own taxing unit, and it shall be the receiving

tax collector's duty to proceed immediately to collect the taxes by any means by which he could

lawfully collect taxes of his own taxing unit. Within 30 days after receiving such a tax receipt

and certificate, the collector receiving them shall report to the tax collector that sent them that he

has collected the tax, that he has begun proceedings to collect the tax, or that he is unable to

collect it. If the tax collector reports that he has begun proceedings to collect the tax, he shall, not

later than 90 days after so reporting, make a final report to the tax collector who certified the tax

receipt stating that he has collected the tax or that he is unable to collect it.

(1) In acting on a tax receipt and certificate under the provisions of this section,

the tax collector receiving them shall, in addition to collecting the amount of

taxes certified as due, also impose a fee equal to ten percent (10%) of the

amount of taxes certified as unpaid, to be paid into the general fund of his

taxing unit.

(2) Within five days after making a collection under the provisions of this section,

the tax collector receiving the tax receipt and certificate shall remit the funds

collected, less the fee provided for in subdivision (c)(1), above, to the tax

collector of the taxing unit that levied the tax.

(3) If the tax collector receiving the tax receipt and certificate reports that he is

unable to collect the tax, he shall make his report under oath and shall state

therein that he has used due diligence and is unable to collect the tax by levy,

attachment and garnishment, or any other legal means.


(d) Liability on Bond. – A tax collector who receives a tax receipt and certificate from

the tax collector of another taxing unit under the provisions of subsection (b), above, shall be

liable on his bond to the taxing unit that levied the tax for the amount of the taxes certified if:

(1) The tax collector receiving the certified tax receipt fails to make any report to

the certifying tax collector within 30 days after receiving the certified tax

receipt.

(2) The tax collector receiving the certified tax receipt fails to swear to any report

stating that he is unable to collect the certified tax.

(3) Having reported that he has begun proceedings to collect a certified tax, the

tax collector receiving the certified tax receipt fails to make a final report

within 90 days after reporting that he has begun proceedings for collection.

(1939, c. 310, s. 1714; 1955, c. 909; 1963, c. 132; 1971, c. 806, s. 1; 1973, c.

231.)

§ 105-365. Preference accorded taxes in liquidation of debtors' estates.

In all cases in which a taxpayer's assets are in the hands of a receiver or assignee for the

benefit of creditors or are otherwise being liquidated or managed for the benefit of creditors, the

taxes owed by the debtor (together with interest, penalties, and costs) shall be a preferred claim,

second only to administration expenses and specific liens. The provisions of this section shall not

be construed to modify or reduce the priority given by G.S. 105-356 to tax liens on real and

personal property or to alter or preclude the exercise of any remedies against personal property

provided for in G.S. 105-366. (1939, c. 310, s. 1704; 1971, c. 806, s. 1.)

§ 105-365.1. When and against whom collection remedies may be used.

(a) Date of Delinquency. – A tax collector may collect a tax using the remedies provided

in G.S. 105-366 through G.S. 105-375 on or after the date the tax is delinquent. A tax is

delinquent on the following date:

(1) For a tax that is not a deferred tax, the date the tax accrues interest.

(2) For a deferred tax, other than a tax described in subdivision (3) of this

subsection, the date a disqualifying event occurs.

(3) For a deferred tax under G.S. 105-277.1B that lost its eligibility for deferral

due to the death of the owner, the first day of the ninth month following the

date of death.

(b) Enforced Collection. – For purposes of using the collection remedies provided in G.S.

105-366 through G.S. 105-375 to collect delinquent taxes, the taxing unit shall proceed against

property of the following taxpayer:

(1) To collect delinquent taxes assessed on real property, the owner of record of

property on which tax is due as of the date of delinquency and any subsequent

owner of record of the property.

(2) To collect delinquent taxes assessed on personal property, the owner of record

as of January 1 of the calendar year in which the fiscal year of taxation begins.

(3) To collect delinquent taxes assessed on a registered motor vehicle, the owner

of record as of the date on which the current vehicle registration is renewed or

the date on which a new registration is applied for. (2008-35, s. 2.8.)

§ 105-366. Remedies against personal property.


(a) Authority to Proceed against Personal Property; Relation between Remedies against

Personal Property and Remedies against Real Property. – All tax collectors shall have authority

to proceed against personal property to enforce the collection of taxes as provided in this section

and in G.S. 105-367 and 105-368. Any tax collector may, in his discretion, proceed first against

personal property before employing the remedies for enforcing the lien for taxes against real

property, and he shall proceed first against personal property:

(1) When directed to do so by the governing body of the taxing unit; or

(2) When requested to do so by the taxpayer or by a mortgagee or other person

holding a lien upon the real property subject to the lien for taxes if the person

making the request furnishes the tax collector with a written statement

describing the personal property to be proceeded against and giving its

location.

No foreclosure of a tax lien on real property may be attacked as invalid on the ground that

payment of the tax should have been procured from personal property.

(b) Remedies after Taxes Are Delinquent. – At any time after taxes are delinquent and

before the filing of a tax foreclosure complaint under G.S. 105-374 or the docketing of a

judgment for taxes under G.S. 105-375, and subject to the provisions of G.S. 105-356 governing

the priority of liens, the tax collector may levy upon and sell or attach the following property for

failure to pay taxes:

(1) Any personal property owned by the taxpayer, regardless of the time at which

it was acquired and regardless of the existence or date of creation of

mortgages or other liens thereon.

(2) Any personal property transferred by the taxpayer to a relative (which shall

mean any parent, grandparent, child, grandchild, brother, sister, aunt, uncle,

niece, or nephew, or their spouses, of the taxpayer or his spouse).

(3) Personal property in the hands of a receiver for the taxpayer. (It shall not be

necessary for the tax collector to apply for an order of the court directing

payment or authorizing the levy or attachment, but he may proceed as though

the property were not in the hands of the receiver, and the tax collector's filing

of a claim in a receivership proceeding shall not preclude him from

proceeding to levy under G.S. 105-367 or to attach under G.S. 105-368.)

(4) Personal property of a deceased taxpayer if the levy or attachment is made

before final settlement of the estate.

(5) The stock of goods or fixtures of a wholesale merchant or retailer, as defined

in G.S. 105-164.3, in the hands of a purchaser or transferee thereof, or any

other personal property of the purchaser or transferee of the property, if the

taxes on the goods or fixtures remain unpaid 30 days after the date of the sale

or transfer. In the case of other personal property of the purchaser or

transferee, the levy or attachment must be made within six months of the sale

or transfer.

(6) Personal property of the taxpayer that has been repossessed by one having a

security interest therein so long as the property remains in the hands of the

person who has repossessed it or the person to whom it has been transferred

other than by bona fide sale for value.

(7) Personal property due the taxpayer or to become due to him within the

calendar year.


(8) Personal property of a partner in satisfaction of taxes on partnership property,

but only after the tax collector:

a. Has sold the taxing unit's lien for taxes against the partnership real

property, if any; and

b. Exhausted the partnership's personal property through the use of levy

and attachment and garnishment; and

c. Exercised the authority granted him by G.S. 105-364 in an effort to

collect the tax due on the partnership's property.

(9) Personal property transferred by the taxpayer by any type of transfer other

than those mentioned in this subsection (b) and other than by bona fide sale

for value if the levy or attachment is made within six months of the transfer.

(c) Remedies Before Taxes Are Delinquent. – If between the date as of which property is

to be listed and January 6 of the fiscal year for which the taxes are imposed the tax collector has

reasonable grounds for believing that the taxpayer is about to remove his property from the

taxing unit or transfer it to another person or is in imminent danger of becoming insolvent, the

tax collector may levy on or attach that property or any other personal property of the taxpayer,

in the manner provided in G.S. 105-367 and 105-368. If the amount of taxes collected under this

subsection has not yet been determined, these taxes shall be computed in accordance with G.S.

105-359 and any applicable discount shall be allowed.

(d) Remedies against Sellers and Purchasers of Stocks of Goods or Fixtures of Wholesale

Merchants or Retailers. –

(1) Any wholesale merchant or retailer, as defined in G.S. 105-164.3, who sells or

transfers the major part of its stock of goods, materials, supplies, or fixtures,

other than in the ordinary course of business, or who goes out of business,

must take the following actions:

a. At least 48 hours prior to the date of the pending sale, transfer, or

termination of business, give notice to the assessors and tax collectors

of the taxing units in which the business is located.

b. Within 30 days of the sale, transfer, or termination of business, pay all

taxes due or to become due on the transferred property on the first day

of September of the current calendar year.

(2) Any person to whom the major part of the stock of goods, materials, supplies,

or fixtures of a wholesale merchant or retailer is sold or transferred, other than

in the ordinary course of business, or who becomes the successor in business

of a wholesale merchant or retailer shall withhold from the purchase money

paid to the merchant an amount sufficient to pay the taxes due or to become

due on the transferred property on the first day of September of the current

calendar year until the former owner or seller produces either a receipt from

the tax collector showing that the taxes have been paid or a certificate that no

taxes are due. If the purchaser or successor in business fails to withhold a

sufficient amount of the purchase money to pay the taxes as required by this

subsection and the taxes remain unpaid after the 30-day period allowed, the

purchaser or successor is personally liable for the amount of the taxes unpaid.

This liability may be enforced by means of a civil action brought in the name

of the taxing unit against the purchaser or successor in an appropriate trial


division of the General Court of Justice in the county in which the taxing unit

is located.

(3) Whenever any wholesale merchant or retailer sells or transfers the major part

of its stock of goods, materials, supplies, or fixtures, other than in the ordinary

course of business, or goes out of business and the taxes due or to become due

on the transferred property on the first day of September of the current

calendar year are unpaid, the tax collector, to enforce collection of the unpaid

taxes, may do any of the following:

a. Levy on or attach any personal property of the seller.

b. If the taxes remain unpaid 30 days after the date of the transfer or

termination of business, levy on or attach any of the property

transferred in the hands of the transferee or successor in business, or

any other personal property of the transferee or successor in business,

but in either case the levy or attachment must be made within six

months of the transfer or termination of business.

(4) In using the remedies provided in this subsection, the amount of taxes not yet

determined shall be computed in accordance with G.S. 105-359, and any

applicable discount shall be allowed. (1939, c. 310, s. 1713; 1951, c. 1141, s.

1; 1955, cc. 1263, 1264; 1957, c. 1414, ss. 2-4; 1969, c. 305, c. 1029, s. 1;

1971, c. 806, s. 1; 1973, c. 564, s. 1; 1987, c. 45, s. 1; c. 93, s. 3; 1998-98, ss.

112, 113.)

§ 105-367. Procedure for levy.

(a) The levy upon the sale of tangible personal property for tax collection purposes

(including levy and sale fees) shall be governed by the laws regulating levy and sale under

execution except as otherwise provided in this section.

(b) The tax collector or any duly appointed deputy tax collector shall make the levy and

conduct the sale; it shall not be necessary for the sheriff to make the levy or conduct the sale.

However, upon the authorization of the governing body of the taxing unit, the tax collector may

direct an execution against personal property for taxes to the sheriff in the case of county or

municipal taxes or to a municipal policeman in the case of municipal taxes. In either case the

officer to whom the execution is directed shall proceed to levy on and sell the personal property

subject to levy in the manner and with the powers and authority normally exercised by sheriffs

in levying upon and selling personal property under execution.

(c) In addition to the notice of sale required by the laws governing sale of property levied

upon under execution, the tax collector may advertise the sale in any reasonable manner and for

any reasonable period of time he deems necessary to produce an adequate bid for the property.

The taxing unit shall advance the cost of all advertising.

(d) Levy and sale fees, plus actual advertising costs, shall be added to and collected in the

same manner as taxes. The advertising costs, when collected, shall be used to reimburse the

taxing unit for advertising costs it has advanced. Levy and sale fees, when collected, shall be

treated in the same manner as other fees received by the collecting official. (1939, c. 310, s.

1713; 1951, c. 1141, s. 1; 1955, cc. 1263, 1264; 1957, c. 1414, ss. 2-4; 1969, c. 305; c. 1029, s. 1;

1971, c. 806, s. 1.)

§ 105-368. Procedure for attachment and garnishment.


(a) Subject to the provisions of G.S. 105-356 governing the priority of the lien acquired,

the tax collector may attach wages and other compensation, rents, bank deposits, the proceeds of

property subject to levy, or any other intangible personal property, including property held in the

Escheat Fund, in the circumstances and to the extent prescribed in G.S. 105-366(b), (c), and (d).

In the case of property due the taxpayer or to become due to him within the current calendar

year, the person owing the property to the taxpayer or having the property in his possession shall

be liable for the taxes to the extent of the amount he owes or has in his possession. However,

when wages or other compensation for personal services is attached, the garnishee shall not pay

to the tax collector more than ten percent (10%) of such compensation for any one pay period.

(b) To proceed under this section, the tax collector shall serve or cause to be served upon

the taxpayer and the person owing or having in his possession the wages, rents, debts or other

property sought to be attached a notice as provided by this subsection. The notice may be

personally served by any deputy or employee of the tax collector or by any officer having

authority to serve summonses, or may be served in any manner provided in Rule 4 of the North

Carolina Rules of Civil Procedure. The notice shall contain:

(1) The name of the taxpayer, and if known his Social Security number or federal

tax identification number and his address.

(2) The amount of the taxes, penalties, interest, and costs (including the fees

allowed by this section) and the year or years for which the taxes were

imposed.

(3) The name of the taxing unit or units by which the taxes were levied.

(4) A brief description of the property sought to be attached.

(5) A copy of the applicable law, that is, G.S. 105-366 and 105-368. Notices

concerning two or more taxpayers may be combined if they are to be served

upon the same garnishee, but the taxes, penalties, interest, and costs charged

against each taxpayer must be set forth separately.

(c) If the garnishee has no defense to offer or no setoff against the taxpayer, he shall

within 10 days after service of the notice answer it by sending to the tax collector by registered

or certified mail a statement to that effect, and if the amount demanded by the tax collector is

then due to the taxpayer or subject to his demand, the garnishee shall remit it to the tax collector

with his statement; but if the amount due to the taxpayer or subject to his demand is to mature in

the future, the garnishee's statement shall set forth that fact, and the demand shall be paid to the

tax collector upon maturity. Any payment by the garnishee under the provisions of this

subsection (c) shall completely satisfy any liability therefor on his part to the taxpayer.

(d) If the garnishee has a defense or setoff against the taxpayer, he shall state it in writing

under oath, and, within 10 days after service of the garnishment notice, he shall send two copies

of his statement to the tax collector by registered or certified mail. If the tax collector admits the

defense or setoff, he shall so advise the garnishee in writing within 10 days after receipt of the

garnishee's statement, and the attachment or garnishment shall thereupon be discharged to the

amount required by the defense or setoff, and any amount attached or garnished which is not

affected by the defense or setoff shall be remitted to the tax collector as provided in subsection

(c), above.

If the tax collector does not admit the defense or setoff, he shall set forth in writing his

objections thereto and send a copy thereof to the garnishee within 10 days after receipt of the

garnishee's statement, or within such further time as may be agreed on by the garnishee, and at

the same time the tax collector shall file a copy of the notice of garnishment, a copy of the


garnishee's statement, and a copy of the tax collector's objections thereto in the appropriate

division of the General Court of Justice of the county in which the garnishee resides or does

business, where the issues made shall be tried as in civil actions.

(e) If the garnishee has not responded to the notice of garnishment as required by

subsections (c) and (d), above, within 15 days after service of the notice, the tax collector may

file in the appropriate division of the General Court of Justice of the county in which the

garnishee resides a copy of the notice of garnishment, accompanied by a written statement that

the garnishee has not responded thereto and a request for judgment, and the issues shall be tried

as in civil actions.

(f) The taxpayer may raise any defenses to the attachment or garnishment that he may

have in the manner provided in subsection (d), above, for the garnishee.

(g) The fee for serving a notice of garnishment shall be the same as that charged in a civil

action. If judgment is entered in favor of the taxing unit by default or after hearing, the garnishee

shall become liable for the taxes, penalties, and interest due by the taxpayer, plus the fees and

costs of the action, but payment shall not be required from amounts which are not to become due

to the taxpayer until they actually come due. The garnishee may satisfy the judgment upon

paying the amount thereof, and if he fails to do so, execution may issue as provided by law.

From any judgment or order entered, either the taxing unit or the garnishee may appeal as

provided by law. If, before or after judgment, adequate security is filed for the payment of the

taxes, penalties, interest, and costs, the tax collector may release the attachment or garnishment,

or execution may be stayed at the request of the tax collector pending appeal, but the final

judgment shall be paid or enforced as above provided. If judgment is rendered against the taxing

unit, it shall pay the fees and costs of the action. All fees collected by officers shall be disposed

of in the same manner as other fees collected by such officers.

(h) Tax collectors may proceed against the wages, salary, or other compensation of

officials and employees of this State and its agencies, instrumentalities, and political subdivisions

in the manner provided in this section. If the taxpayer is an employee of the State, the notice of

attachment shall be served upon him and upon the head or chief fiscal officer of the department,

agency, instrumentality, or institution by which he is employed. If the taxpayer is an employee

of a political subdivision of the State (county, municipality, etc.), the notice of attachment shall

be served upon him and upon the officer charged with making up the payrolls of the political

subdivision by which he is employed. All deductions from the wages or salary of a taxpayer

made pursuant to this subsection (h) and remitted to the tax collector shall, pro tanto, constitute a

satisfaction of the salary or wages due the taxpayer.

(i) (1) Any person who, after written demand therefor, refuses to give the tax

collector or assessor a list of the names and addresses of all of his employees

who may be liable for taxes, shall be guilty of a Class 1 misdemeanor.

(2) Any tax collector or assessor who receives, upon his written demand, any list

of employees may not release or furnish that list or any copy thereof, or

disclose any name or information thereon, to any other person, and may not

use that list in any manner or for any purpose not directly related to and in

furtherance of the collection and foreclosure of taxes. Any tax collector or

assessor who violates or allows the violation of this subdivision (i)(2) shall be

guilty of a Class 1 misdemeanor. (1939, c. 310, s. 1713; 1951, c. 1141, s. 1;

1955, cc. 1263, 1264; 1957, c. 1414, ss. 2-4; 1969, c. 305, c. 1029, s. 1; 1971,

c. 806, s. 1; 1979, c. 103, ss. 3, 4; 1979, 2nd Sess., c. 1085, s. 2; 1981, c. 76, s.


1; 1987, c. 45, s. 1; 1989, c. 580, s. 2; 1993, c. 539, s. 724; 1994, Ex. Sess., c.

24, s. 14(c).)

§ 105-369. Advertisement of tax liens on real property for failure to pay taxes.

(a) Report of Unpaid Taxes That Are Liens on Real Property. – In February of each year,

the tax collector must report to the governing body the total amount of unpaid taxes for the

current fiscal year that are liens on real property. A county tax collector's report is due the first

Monday in February, and a municipal tax collector's report is due the second Monday in

February. Upon receipt of the report, the governing body must order the tax collector to advertise

the tax liens. For purposes of this section, district taxes collected by county tax collectors shall be

regarded as county taxes and district taxes collected by municipal tax collectors shall be regarded

as municipal taxes.

(b) Repealed by Session Laws 1983 (Regular Session, 1984), c. 1013.

(b1) Notice to Owner. – After the governing body orders the tax collector to advertise the

tax liens, the tax collector must send a notice to the record owner of each affected parcel of

property, as determined as of the date the taxes became delinquent. The notice must be sent to

the owner's last known address by first-class mail at least 30 days before the date the

advertisement is to be published. The notice must state the principal amount of unpaid taxes that

are a lien on the parcel to be advertised and inform the owner that the name of the record owner

as of the date the taxes became delinquent will appear in a newspaper advertisement of

delinquent taxes if the taxes are not paid before the publication date. Failure to mail the notice

required by this section to the correct record owner does not affect the validity of the tax lien or

of any foreclosure action.

(c) Time and Contents of Advertisement. – A tax collector's failure to comply with this

subsection does not affect the validity of the taxes or tax liens. The county tax collector shall

advertise county tax liens by posting a notice of the liens at the county courthouse and by

publishing each lien at least one time in one or more newspapers having general circulation in

the taxing unit. The municipal tax collector shall advertise municipal tax liens by posting a notice

of the liens at the city or town hall and by publishing each lien at least one time in one or more

newspapers having general circulation in the taxing unit. Advertisements of tax liens shall be

made during the period March 1 through June 30. The costs of newspaper advertising shall be

paid by the taxing unit. If the taxes of two or more taxing units are collected by the same tax

collector, the tax liens of each unit shall be advertised separately unless, under the provisions of a

special act or contractual agreement between the taxing units, joint advertisement is permitted.

The posted notice and newspaper advertisement shall set forth the following information:

(1) Repealed by Session Laws 2006-106, s. 2, effective for taxes imposed for


(1a) The name of the record owner as of the date the taxes became delinquent for

each parcel on which the taxing unit has a lien for unpaid taxes, in

alphabetical order.

(1b) After the information required by subdivision (1a) of this subsection for each

parcel, a brief description of each parcel of land to which a lien has attached

and a statement of the principal amount of the taxes constituting a lien against

the parcel.


(2) A statement that the amounts advertised will be increased by interest and costs

and that the omission of interest and costs from the amounts advertised will

not constitute waiver of the taxing unit's claim for those items.

(3) In the event the list of tax liens has been divided for purposes of advertisement

in more than one newspaper, a statement of the names of all newspapers in

which advertisements will appear and the dates on which they will be

published.

(4) A statement that the taxing unit may foreclose the tax liens and sell the real

property subject to the liens in satisfaction of its claim for taxes.

(d) Costs. – Each parcel of real property advertised pursuant to this section shall be

assessed an advertising fee to cover the actual cost of the advertisement. Actual advertising costs

per parcel shall be determined by the tax collector on any reasonable basis. Advertising costs

assessed pursuant to this subsection are taxes.

(e) Payments during Advertising Period. – At any time during the advertisement period,

any parcel may be withdrawn from the list by payment of the taxes plus interest that has accrued

to the time of payment and a proportionate part of the advertising fee to be determined by the tax

collector. Thereafter, the tax collector shall delete that parcel from any subsequent

advertisement, but the tax collector is not liable for failure to make the deletion.

(f) Listing and Advertising in Wrong Name. – No tax lien is void because the real

property to which the lien attached was listed or advertised in the name of a person other than the

person in whose name the property should have been listed for taxation if the property was in

other respects correctly described on the abstract or in the advertisement.

(g) Wrongful Advertisement. – Any tax collector or deputy tax collector who willfully

advertises any tax lien knowing that the property is not subject to taxation or that the taxes

advertised have been paid is guilty of a Class 3 misdemeanor, and shall be required to pay the

injured party all damages sustained in consequence. (1939, c. 310, s. 1715; 1955, c. 993; 1971, c.

806, s. 1; 1983, c. 808, s. 1; 1983 (Reg. Sess., 1984), c. 1013; 1993, c. 539, s. 725; 1994, Ex.

Sess., c. 24, s. 14(c); 1999-439, s. 1; 2000-140, s. 73; 2006-106, s. 2.)

§§ 105-370 through 105-372: Repealed by Session Laws 1983, c. 808, ss. 2-4.

§ 105-373. Settlements.

(a) Annual Settlement of Tax Collector. –

(1) Preliminary Report. – After July 1 and before he is charged with taxes for the

current fiscal year, the tax collector shall make a sworn report to the

governing body of the taxing unit showing:

a. A list of the persons owning real property whose taxes for the

preceding fiscal year remain unpaid and the principal amount owed by

each person; and

b. A list of the persons not owning real property whose personal property

taxes for the preceding fiscal year remain unpaid and the principal

amount owed by each person. (To this list the tax collector shall

append his statement under oath that he has made diligent efforts to

collect the taxes due from the persons listed out of their personal

property and by other means available to him for collection, and he

shall report such other information concerning these taxpayers as may


be of interest to or required by the governing body, including a report

of his efforts to make collection outside the taxing unit under the

provisions of G.S. 105-364.) The governing body of the taxing unit

may publish this list in any newspaper in the taxing unit. The cost of

publishing this list shall be paid by the taxing unit.

(2) Insolvents. – Upon receiving the report required by subdivision (a)(1), above

the governing body of the taxing unit shall enter upon its minutes the names of

persons owing taxes (but who listed no real property) whom it finds to be

insolvent, and it shall by resolution designate the list entered in its minutes as

the insolvent list to be credited to the tax collector in his settlement.

(3) Settlement for Current Taxes. – After July 1 and before he is charged with

taxes for the current fiscal year, the tax collector shall make full settlement

with the governing body of the taxing unit for all taxes in his hands for

collection for the preceding fiscal year.

a. In the settlement the tax collector shall be charged with:

1. The total amount of all taxes in his hands for collection for the

year, including amounts originally charged to him and all

amounts subsequently charged on account of discoveries;

2. All penalties, interest, and costs collected by him in connection

with taxes for the current year; and

3. All other sums collected by him.

b. The tax collector shall be credited with:

1. All sums representing taxes for the year deposited by him to

the credit of the taxing unit or receipted for by a proper official

of the unit;

2. Releases duly allowed by the governing body;

3. The principal amount of taxes constituting liens on real

property;

4. The principal amount of taxes included in the insolvent list

determined in accordance with subdivision (a)(2), above;

5. Discounts allowed by law;

6. Commissions (if any) lawfully payable to the tax collector as

compensation; and

7. The principal amount of taxes for any assessment appealed to

the Property Tax Commission when the appeal has not been

finally adjudicated.

The tax collector shall be liable on his bond for both honesty and faithful

performance of duty; for any deficiencies; and, in addition, for all criminal

penalties provided by law.

The settlement, together with the action of the governing body with

respect thereto, shall be entered in full upon the minutes of the governing

body.

(4) Disposition of Tax Receipts after Settlement. – Uncollected taxes allowed as

credits in the settlement prescribed in subdivision (a)(3), above, whether

represented by tax liens held by the taxing unit or included in the list of

insolvents, shall, for purposes of collection, be recharged to the tax collector


or charged to some other person designated by the governing body of the

taxing unit under statutory authority. The person charged with uncollected

taxes shall:

a. Give bond satisfactory to the governing body;

b. Receive the tax receipts and tax records representing the uncollected

taxes;

c. Have and exercise all powers and duties conferred or imposed by law

upon tax collectors; and

d. Receive compensation as determined by the governing body.

(b) Settlements for Delinquent Taxes. – Annually, at the time prescribed for the

settlement provided in subdivision (a)(3), above, all persons having in their hands for collection

any taxes for years prior to the year involved in the settlement shall settle with the governing

body of the taxing unit for collections made on each such year's taxes. The settlement for the

taxes for prior years shall be made in whatever form is satisfactory to the chief accounting officer

and the governing body of the taxing unit, and it shall be entered in full upon the minutes of the

governing body.

(c) Settlement at End of Term. – Whenever any tax collector fails to succeed himself at

the end of his term of office, he shall, on the last business day of his term, make full and

complete settlement for all taxes (current or delinquent) in his hands and deliver the tax records,

tax receipts, tax sale certificates, and accounts to his successor in office. The settlement shall be

made in whatever form is satisfactory to the chief accounting officer and the governing body of

the taxing unit, and it shall be entered in full upon the minutes of the governing body.

(d) Settlement upon Vacancy during Term. – When a tax collector voluntarily resigns, he

shall, upon his last day in office, make full settlement (in the manner provided in subsection (c),

above) for all taxes in his hands for collection. In default of such a settlement, or in case of a

vacancy occurring during a term for any reason, it shall be the duty of the chief accounting

officer or, in the discretion of the governing body, of some other qualified person appointed by it

immediately to prepare and submit to the governing body a report in the nature of a settlement

made on behalf of the former tax collector. The report, together with the governing body's action

with respect thereto, shall be entered in full upon the minutes of the governing body. Whenever a

settlement must be made in behalf of a former tax collector, as provided in this subsection (d),

the governing body may deliver the tax receipts, tax records, and tax sale certificates to a

successor collector immediately upon the occurrence of the vacancy, or it may make whatever

temporary arrangements for the collection of taxes as may be expedient, but in no event shall any

person be permitted to collect taxes until he has given bond satisfactory to the governing body.

(e) Effect of Approval of Settlement. – Approval of any settlement by the governing

body does not relieve the tax collector or his bondsmen of liability for any shortage actually

existing at the time of the settlement and thereafter discovered; nor does it relieve the collector of

any criminal liability.

(f) Penalties. – In addition to any other civil or criminal penalties provided by law, any

member of a governing body of a taxing unit, tax collector, or chief accounting officer who fails

to perform any duty imposed upon him by this section shall be guilty of a Class 1 misdemeanor.

(g) Relief from Collecting Insolvents. – The governing body of any taxing unit may, in

its discretion, relieve the tax collector of the charge of taxes owed by persons on the insolvent list

that are five or more years past due when it appears to the governing body that such taxes are

uncollectible.


(h) Relief from Collecting Taxes on Classified Motor Vehicles. The board of county

commissioners may, in its discretion, relieve the tax collector of the charge of taxes on classified

motor vehicles listed pursuant to G.S. 105-330.3(a)(1) that are one year or more past due when it

appears to the board that the taxes are uncollectible. This relief, when granted, shall include

municipal and special district taxes charged to the collector. (1939, c. 310, s. 1719; 1945, c. 635;

1947, c. 484, ss. 3, 4; 1951, c. 300, s. 1; c. 1036, s. 1; 1953, c. 176, s. 2; 1955, c. 908; 1967, c.

705, s. 1; 1971, c. 806, s. 1; 1983, c. 670, s. 22; c. 808, ss. 5-7; 1987, c. 16; 1991, c. 624, s. 3;

1991 (Reg. Sess., 1992), c. 961, s. 10; 1993, c. 539, s. 726; 1994, Ex. Sess., c. 24, s. 14(c);

1997-456, s. 27; 2006-30, s. 7.)

§ 105-374. Foreclosure of tax lien by action in nature of action to foreclose a mortgage.

(a) General Nature of Action. – The foreclosure action authorized by this section shall be

instituted in the appropriate division of the General Court of Justice in the county in which the

real property is situated and shall be an action in the nature of an action to foreclose a mortgage.

(b) Taxing units may proceed under this section, either on the original tax lien created by

G.S. 105-355(a) or on the lien acquired at a tax lien sale held under former G.S. 105-369 before

July 1, 1983, with or without a lien sale certificate; and the amount of recovery in either case

shall be the same. To this end, it is hereby declared that the original attachment of the tax lien

under G.S. 105-355(a) is sufficient to support a tax foreclosure action by a taxing unit, that the

issuance of a lien sale certificate to the taxing unit for lien sales held before July 1, 1983, is a

matter of convenience in record keeping within the discretion of the governing body of the

taxing unit, and that issuance of such certificates is not a prerequisite to perfection of the tax lien.

(c) Parties; Summonses. – The owner of record as of the date the taxes became

delinquent and spouse (if any), any subsequent owner, all other taxing units having tax liens, all

other lienholders of record, and all persons who would be entitled to be made parties to a court

action (in which no deficiency judgment is sought) to foreclose a mortgage on such property,

shall be made parties and served with summonses in the manner provided by G.S. 1A-1, Rule 4.

The fact that the owner of record as of the date the taxes became delinquent, any subsequent

owner, or any other defendant is a minor, is incompetent, or is under any other disability shall

not prevent or delay the tax lien sale or the foreclosure of the tax lien; and all such persons shall

be made parties and served with summons in the same manner as in other civil actions.

Persons who have disappeared or who cannot be located and persons whose names and

whereabouts are unknown, and all possible heirs or assignees of such persons, may be served by

publication; and such persons, their heirs, and assignees may be designated by general

description or by fictitious names in such an action.

(c1) Lienholders Separately Designated. – The word "lienholder" shall appear

immediately after the name of each lienholder (including trustees and beneficiaries in deeds of

trust, and holders of judgment liens) whose name appears in the caption of any action instituted

under the provisions of this section. Such designation is intended to make clear to the public the

capacity of such persons which necessitated their having been made parties to such action.

Failure to add such designation to captions shall not constitute grounds for attacking the validity

of actions brought under this section, or titles to real property derived from such actions.

(d) Complaint as Lis Pendens. – The complaint in an action brought under this section

shall, from the time it is filed in the office of the clerk of superior court, serve as notice of the

pendency of the foreclosure action, and every person whose interest in the real property is

subsequently acquired or whose interest therein is subsequently registered or recorded shall be


bound by all proceedings taken in the foreclosure action after the filing of the complaint in the

same manner as if those persons had been made parties to the action. It shall not be necessary to

have the complaint cross-indexed as a notice of action pending to have the effect prescribed by

this subsection (d).

(e) Subsequent Taxes. – The complaint in a tax foreclosure action brought under this

section by a taxing unit shall, in addition to alleging the tax lien on which the action is based,

include a general allegation of subsequent taxes which are or may become a lien on the same real

property in favor of the plaintiff unit. Thereafter it shall not be necessary to amend the complaint

to incorporate the subsequent taxes by specific allegation. In case of redemption before

confirmation of the foreclosure sale, the person redeeming shall be required to pay, before the

foreclosure action is discontinued, at least all taxes on the real property which have at the time of

discontinuance become due to the plaintiff unit, plus penalties, interest, and costs thereon.

Immediately prior to judgment ordering sale in a foreclosure action (if there has been no

redemption prior to that time), the tax collector or the attorney for the plaintiff unit shall file in

the action a certificate setting forth all taxes which are a lien on the real property in favor of the

plaintiff unit (other than taxes the amount of which has not been definitely determined).

Any plaintiff in a tax foreclosure action (other than a taxing unit) may include in his

complaint, originally or by amendment, all other taxes and special assessments paid by him

which were liens on the same real property.

(f) Joinder of Parcels. – All real property within the taxing unit subject to liens for taxes

levied against the same taxpayer for the first year involved in the foreclosure action may be

joined in one action. However, if real property is transferred by the listing taxpayer subsequent to

the first year involved in the foreclosure action, all subsequent taxes, penalties, interest, and costs

(for which the property is ordered sold under the terms of this Subchapter) shall be prorated to

such property in the same manner as if payments were being made to release such property from

the tax lien under the provisions of G.S. 105-356(b).

(g) Special Benefit Assessments. – A cause of action for the foreclosure of the lien of any

special benefit assessments may be included in any complaint filed under this section.

(h) Joint Foreclosure by Two or More Taxing Units. – Liens of different taxing units on

the same parcel of real property, representing taxes in the hands of the same tax collector, shall

be foreclosed in one action. Liens of different taxing units on the same parcel of real property,

representing taxes in the hands of different tax collectors, may be foreclosed in one action in the

discretion of the governing bodies of the taxing units.

The lien of any taxing unit made a party defendant in any foreclosure action shall be alleged

in an answer filed by the taxing unit, and the tax collector of each answering unit shall, prior to

judgment ordering sale, file a certificate of subsequent taxes similar to that filed by the tax

collector of the plaintiff unit, and the taxes of each answering unit shall be of equal dignity with

the taxes of the plaintiff unit. Any answering unit may, in case of payment of the plaintiff unit's

taxes, continue the foreclosure action until all taxes due to it have been paid, and it shall not be

necessary for any answering unit to file a separate foreclosure action or to proceed under G.S.

105-375 with respect to any such taxes.

If a taxing unit properly served as a party defendant in a foreclosure action fails to answer

and file the certificate provided for in the preceding paragraph, all of its taxes shall be barred by

the judgment of sale except to the extent that the purchase price at the foreclosure sale (after

payment of costs and of the liens of all taxing units whose liens are properly alleged by

complaint or answer and certificates) may be sufficient to pay such taxes. However, if a


defendant taxing unit is plaintiff in another foreclosure action pending against the same property,

or if it has begun a proceeding under G.S. 105-375, its answer may allege that fact in lieu of

alleging its liens, and the court, in its discretion, may order consolidation of such actions or such

other disposition thereof (and such disposition of the costs therein) as it may deem advisable.

Any such order may be made by the clerk of the superior court, subject to appeal as provided in

G.S. 1-301.1.

(i) Costs. – Subject to the provisions of this subsection (i), costs may be taxed in any

foreclosure action brought under this section in the same manner as in other civil actions. When

costs are collected, either by payment prior to the sale or upon payment of the purchase price at

the foreclosure sale, the fees allowed officers shall be paid to those entitled to receive them. In

foreclosure actions in which the plaintiff is a taxing unit, no prosecution bond shall be required.

The word "costs," as used in this subsection (i), shall be construed to include one reasonable

attorney's fee for the plaintiff in such amount as the court shall, in its discretion, determine and

allow. When a taxing unit is made a party defendant in a tax foreclosure action and files answer

therein, there may be included in the costs an attorney's fee for the defendant unit in such amount

as the court shall, in its discretion, determine and allow. The governing body of any taxing unit

may, in its discretion, pay a smaller or greater sum than that allowed as costs to its attorney as a

suit fee, and the governing body may allow a reasonable commission to its attorney on taxes

collected by him after they have been placed in his hands; or the governing body may arrange

with its attorney for the handling of tax foreclosure suits on a salary basis or may make any other

reasonable agreement with its attorney or attorneys. Any arrangement made between a taxing

unit and its attorney may provide that attorneys' fees collected as costs in foreclosure actions be

collected for the use of the taxing unit.

In any foreclosure action in which real property is actually sold after judgment, costs shall

include a commissioner's fee to be fixed by the court, not exceeding five percent (5%) of the

purchase price; and in case of redemption between the date of sale and the order of confirmation,

the fee shall be added to the amount otherwise necessary for redemption. In case more than one

sale is made of the same property in any action, the commissioner's fee may be based on the

highest amount bid, but the commissioner shall not be allowed a separate fee for each such sale.

The governing body of any plaintiff unit may request the court to appoint as commissioner a

salaried official, attorney, or employee of the unit and, when the requested appointment is made,

may require that the commissioner's fees, when collected, be paid to the plaintiff unit for its use.

(j) Contested Actions. – Any action brought under this section in which an answer

raising an issue requiring trial is filed within the time allowed by law shall be entitled to a

preference as to time of trial over all other civil actions.

(k) Judgment of Sale. – Any judgment in favor of the plaintiff or any defendant taxing

unit in an action brought under this section shall order the sale of the real property or as much as

may be necessary for the satisfaction of all of the following:

(1) Taxes adjudged to be liens in favor of the plaintiff (other than taxes the

amount of which has not been definitely determined) together with penalties,

interest, and costs thereon.

(2) Taxes adjudged to be liens in favor of other taxing units (other than taxes the

amount of which has not yet been definitely determined) if those taxes have

been alleged in answers filed by the other taxing units, together with penalties,

interest, and costs thereon.


The judgment shall appoint a commissioner to conduct the sale and shall order that the property

be sold in fee simple, free and clear of all interests, rights, claims, and liens whatever except that

the sale shall be subject to taxes the amount of which cannot be definitely determined at the time

of the judgment, taxes and special assessments of taxing units which are not parties to the action,

and, in the discretion of the court, taxes alleged in other tax foreclosure actions or proceedings

pending against the same real property.

In all cases in which no answer is filed within the time allowed by law, and in cases in which

answers filed do not seek to prevent sale of said property, the clerk of the superior court may

enter the judgment, subject to appeal as provided in G.S. 1-301.1.

(l) Advertisement of Sale. – The sale shall be advertised, and all necessary resales shall

be advertised, in the manner provided by Article 29A of Chapter 1 of the General Statutes or by

any statute enacted in substitution therefor.

(m) Sale. – The sale shall be by public auction to the highest bidder and shall, in

accordance with the judgment, be held at the courthouse door on any day of the week except a

Sunday or legal holiday when the courthouse is closed for transactions. (In actions brought by a

municipality that is not a county seat, the court may, in its discretion, direct that the sale be held

at the city or town hall door.) The commissioner conducting the sale may, in his discretion,

require from any successful bidder a deposit equal to not more than twenty percent (20%) of his

bid, which deposit, in the event that the bidder refuses to take title and a resale becomes

necessary, shall be applied to pay the costs of sale and any loss resulting. (However, this

provision shall not deprive the commissioner of his right to sue for specific performance of the

contract.) No deposit shall be required of a taxing unit that has made the highest bid at the

foreclosure sale.

(n) Report of Sale. – Within three days following the foreclosure sale the commissioner

shall report the sale to the court giving full particulars thereof.

(o) Exceptions and Increased Bids. – At any time within 10 days after the commissioner

files his report of the foreclosure sale, any person having an interest in the real property may file

exceptions to the report, and at any time within that 10-day period an increased bid may be filed

in the amount specified by and subject to the provisions (other than provisions in conflict

herewith) of Article 29A of Chapter 1 of the General Statutes or the provisions (other than

provisions in conflict herewith) of any law enacted in substitution therefor. In the absence of

exceptions or increased bids, the court may, whenever it deems such action necessary for the best

interests of the parties, order resale of the property.

(p) Judgment of Confirmation. – At any time after the expiration of 10 days from the

time the commissioner files his report, if no exception or increased bid has been filed, the

commissioner may apply for judgment of confirmation, and in like manner he may apply for

such a judgment after the court has passed upon exceptions filed, or after any necessary resales

have been held and reported and 10 days have elapsed. The judgment of confirmation shall direct

the commissioner to deliver the deed upon payment of the purchase price. This judgment may be

entered by the clerk of superior court subject to appeal as provided in G.S. 1-301.1.

(q) Application of Proceeds; Commissioner's Final Report. – After delivery of the deed

and collection of the purchase price, the commissioner shall apply the proceeds as follows:

(1) First, to payment of all costs of the action, including the commissioner's fee

and the attorney's fee, which costs shall be paid to the officials or funds

entitled thereto;


(2) Then to the payment of taxes, penalties, and interest for which the real

property was ordered to be sold, and in case the funds remaining are

insufficient for this purpose, they shall be distributed pro rata to the various

taxing units for whose taxes the property was ordered sold;

(3) Then pro rata to the payment of any special benefit assessments for which the

property was ordered sold, together with interest and costs thereon;

(4) Then pro rata to payment of taxes, penalties, interest, and costs of taxing units

that were parties to the foreclosure action but which filed no answers therein;

(5) Then pro rata to payment of special benefit assessments of taxing units that

were parties to the foreclosure action but which filed no answers therein,

together with interest and costs thereon;

(6) And any balance then remaining shall be paid in accordance with any

directions given by the court and, in the absence of such directions, shall be

paid into court for the benefit of the persons entitled thereto. (If the clerk is in

doubt as to who is entitled to the surplus or if any adverse claims are asserted

thereto, the clerk shall hold the surplus until rights thereto are established in a

special proceeding pursuant to G.S. 1-339.71.)

Within five days after delivering the deed, the commissioner shall make a full report to the court

showing delivery of the deed, receipt of the purchase price, and the disbursement of the

proceeds, accompanied by receipts evidencing all such disbursements.

(r) Purchase and Resale by Taxing Unit. – The rights of a taxing unit to purchase real

property at a foreclosure sale and resell it are governed by G.S. 105-376. (1939, c. 310, s. 1719;

1945, c. 635; 1947, c. 484, ss. 3, 4; 1951, c. 300, s. 1; c. 1036, s. 1; 1953, c. 176, s. 2; 1955, c.

908; 1967, c. 705, s. 1; 1971, c. 806, s. 1; 1973, c. 788, s. 1; 1981, c. 580; 1983, c. 808, s. 8;

1999-216, ss. 14-16; 2003-337, s. 11; 2006-106, s. 3.)

§ 105-375. In rem method of foreclosure.

(a) Intent of Section. – It is hereby declared to be the intention of this section that

proceedings brought under it shall be strictly in rem. It is further declared to be the intention of

this section to provide, as an alternative to G.S. 105-374, a simple and inexpensive method of

enforcing payment of taxes necessarily levied, to the knowledge of all persons, for the

requirements of local governments in this State; and to recognize, in authorizing this proceeding,

that all persons owning interests in real property know or should know that the tax lien on their

real property may be foreclosed and the property sold for failure to pay taxes.

(b) Docketing Certificate of Taxes as Judgment. – In lieu of following the procedure set

forth in G.S. 105-374, the governing body of any taxing unit may direct the tax collector to file

with the clerk of superior court, no earlier than 30 days after the tax liens were advertised, a

certificate showing the following: the name of the taxpayer as defined in G.S. 105-273(17), for

each parcel on which the taxing unit has a lien for unpaid taxes, together with the amount of

taxes, penalties, interest, and costs that are a lien thereon; the year or years for which the taxes

are due; and a description of the property sufficient to permit its identification by parol

testimony. The fees for docketing and indexing the certificate shall be payable to the clerk of

superior court at the time the taxes are collected or the property is sold.

(c) Notice to Taxpayer and Others. –

(1) Notice required. – The tax collector filing the certificate provided for in

subsection (b) of this section, shall, at least 30 days prior to docketing the


judgment, send notice of the tax lien foreclosure to the taxpayer, as defined in

G.S. 105-273(17), at the taxpayer's last known address, and to all lienholders

of record who have a lien against the taxpayer (including any liens referred to

in the conveyance of the property to the taxpayer).

(2) Contents of notice. – All notice required by this subsection shall state that a

judgment will be docketed and the proposed date of the docketing, that

execution will be issued as provided by law, a brief description of the real

property affected, and that the lien may be satisfied prior to judgment being

entered.

(3) Service of notice. – The notice required by this subsection shall be sent to the

taxpayer by registered or certified mail, return receipt requested.

(4) Additional efforts may be required. – If within 10 days following the mailing

of the notice, a return receipt has not been received by the tax collector

indicating receipt of the notice, then the tax collector shall do both of the

following:

a. Make reasonable efforts to locate and notify the taxpayer and all

lienholders of record prior to the docketing of the judgment and the

issuance of the execution. Reasonable efforts may include posting the

notice in a conspicuous place on the property, or, if the property has an

address to which mail may be delivered, mailing the notice by

first-class mail to the attention of the occupant.

b. Have a notice published in a newspaper of general circulation in the

county once a week for two consecutive weeks directed to, and

naming, all unnotified lienholders and the taxpayer that a judgment

will be docketed against the taxpayer.

(5) Costs of notice added to lien. – All costs of mailing and publication, plus a

charge of two hundred fifty dollars ($250.00) to defray administrative costs,

shall be added to the amount of taxes that are a lien on the real property and

shall be paid by the taxpayer to the taxing unit at the time the taxes are

collected or the property is sold.

(d) Effect of Docketing Certificate of Taxes Due. – Immediately upon the docketing and

indexing of a certificate as provided in subsection (b), above, the taxes, penalties, interest, and

costs shall constitute a valid judgment against the real property described therein, with the

priority provided for tax liens in G.S. 105-356. The judgment, except as expressly provided in

this section, shall have the same force and effect as a duly rendered judgment of the superior

court directing sale of the property for the satisfaction of the tax lien, and it shall bear interest at

an annual rate of eight percent (8%).

(e) Special Assessments. – Street, sidewalk, and other special assessments may be

included in any judgment for taxes taken under this section, or the special assessments may be

included in a separate judgment docketed under this section. The tax collector may use such a

judgment as a method of foreclosing the lien of special assessments. When used to foreclose the

lien of special assessments, the procedure may be instituted at any time after the assessment or

installment falls due and remains unpaid; the waiting period required by subsection (b) of this

section does not apply to the foreclosure of special assessments.

(f) Motion to Set Aside. – At any time prior to the issuance of execution, any person

having an interest in the real property to be foreclosed may appear before the clerk of superior


court and move to set aside the judgment on the ground that the tax has been paid or that the tax

lien on which the judgment is based is invalid.

(g) Cancellation upon Payment. – Upon payment in full of any judgment docketed under

this section, together with interest thereon and costs accrued to the date of payment, the tax

collector receiving payment shall certify the fact thereof to the clerk of superior court and cancel

the judgment.

(h) Relationship between G.S. 105-374 and This Section. – If, before the issuance of

execution on the judgment under subsection (i), below, the taxing unit is made a defendant in a

foreclosure action brought against the property under G.S. 105-374, it shall file an answer in that

proceeding and thereafter all proceedings shall be governed by order of the court in accordance

with that section.

(i) Issuance of Execution. – At any time after three months and before two years from

the indexing of the judgment as provided in subsection (b), above, execution shall be issued at

the request of the tax collector in the same manner as executions are issued upon other judgments

of the superior court, and the real property shall be sold by the sheriff in the same manner as

other real property is sold under execution with the following exceptions:

(1) No debtor's exemption shall be allowed.

(2) In lieu of personal service of notice on the taxpayer, the sheriff shall send

notice by registered or certified mail, return receipt requested, to the taxpayer

at the taxpayer's last known address at least 30 days prior to the day fixed for

the sale. If within 10 days following the mailing of the notice, a return receipt

has not been received by the sheriff indicating receipt of the notice, then the

sheriff shall make additional efforts to locate and notify the taxpayer and all

lienholders of record of the sale under execution in accordance with

subdivision (4) of subsection (c) of this section.

(3) The sheriff shall add to the amount of the judgment as costs of the sale any

postage expenses incurred by the tax collector and the sheriff in foreclosing

under this section.

(4) In any advertisement or posted notice of sale under execution, the sheriff may

(and at the request of the governing body shall) combine the advertisements or

notices for properties to be sold under executions against the properties of

different taxpayers in favor of the same taxing unit or group of units; however,

the property included in each judgment shall be separately described and the

name of the taxpayer specified in connection with each.

The purchaser at the execution sale shall acquire title to the property in fee simple free and

clear of all claims, rights, interests, and liens except the liens of other taxes or special

assessments not paid from the purchase price and not included in the judgment.

(j) Attorney's Fee. – The governing body of the taxing unit may make whatever

arrangement it deems satisfactory for compensating an attorney rendering assistance or advice in

foreclosure proceedings brought under this section, but the attorney's fee shall not be added to

the judgment as part of the costs of the action.

(k) Consolidation of Liens. – By agreement between the governing bodies, two or more

taxing units may consolidate their tax liens for the purpose of docketing a judgment, or may have

one execution issued for separate judgments, against the same property. In like manner, one

execution may issue for separate judgments in favor of one or more taxing units against the same

property for different years' taxes.


(l) Purchase and Resale by Taxing Unit. – The rights of a taxing unit to purchase real

property at a foreclosure sale and resell it are governed by G.S. 105-376.

(m) Procedure if Section Declared Unconstitutional. – If any provisions of this section are

declared invalid or unconstitutional by the Supreme Court of North Carolina, a United States

district court of three judges, the United States Circuit Court of Appeals, or the United States

Supreme Court, all taxing units that have proceeded under this section shall have five years from

the date of the filing of the opinion (or, in the case of appeal, from the date of the filing of the

opinion on appeal) in which to institute foreclosure actions under G.S. 105-374 for all taxes

included in judgments taken under this section and for subsequent taxes due or which, but for

purchase of the property by the taxing unit, would have become due; and such judicial decision

shall not have the effect of invalidating the tax lien or disturbing its priority. (1939, c. 310, s.

1720; 1945, c. 646; 1957, cc. 91, 1262; 1971, c. 806, s. 1; 1973, c. 108, s. 52; c. 681, ss. 1, 2;

1983, c. 808, s. 9; c. 855, ss. 1, 2; 1987, c. 450; 1989, c. 37, s. 7; c. 682; 1999-439, ss. 2, 3;

2001-139, s. 9; 2006-106, ss. 4-6; 2011-352, s. 1.)

§ 105-376. Taxing unit as purchaser at foreclosure sale; payment of purchase price; resale

of property acquired by taxing unit.

(a) Taxing Unit as Purchaser. – Any taxing unit (or two or more taxing units jointly) may

bid at a foreclosure sale conducted under G.S. 105-374 or G.S. 105-375, and any taxing unit that

becomes the successful bidder may assign its bid at any time by private sale for not less than the

amount of the bid.

(b) Payment of Purchase Price by Taxing Units; Status of Property Purchased by Taxing

Units. – Any taxing unit that becomes the purchaser at a tax foreclosure sale may, in the

discretion of its governing body, pay only that part of the purchase price that would not be

distributed to it and other taxing units on account of taxes, penalties, interest, and such costs as

accrued prior to the initiation of the foreclosure action under G.S. 105-374 or docketing of a

judgment under G.S. 105-375. Thereafter, in such a case, the purchasing taxing unit shall hold

the property for the benefit of all taxing units that have an interest in the property as defined in

this subsection (b). All net income from real property so acquired and the proceeds thereof, when

resold, shall be first used to reimburse the purchasing unit for disbursements actually made by it

in connection with the foreclosure action and the purchase of the property, and any balance

remaining shall be distributed to the taxing units having an interest therein in proportion to their

interests. The total interest of each taxing unit, including the purchasing unit, shall be determined

by adding:

(1) The taxes of the unit, with penalties, interest, and costs (other than costs

already reimbursed to the purchasing unit) to satisfy which the property was

ordered sold;

(2) Other taxes of the unit, with penalties, interest, and costs which would have

been paid in full from the purchase price had the purchase price been paid in

full;

(3) Taxes of the unit, with penalties, interest, and costs to which the foreclosure

sale was made subject; and

(4) The principal amount of all taxes which became liens on the property after

purchase at the foreclosure sale or which would have become liens thereon but

for the purchase, but no amount shall be included for taxes for years in which


(on the day as of which property was to be listed for taxation) the property

was being used by the purchasing unit for a public purpose.

If the amount of net income and proceeds of resale distributable exceeds the total interests of all

taxing units defined in this subsection (b), the remainder shall be applied to any special benefit

assessments to satisfy which the sale was ordered or to which the sale was made subject, and any

balance remaining shall accrue to the purchasing unit.

When any real property that has been purchased as provided in this section is permanently

dedicated to use for a public purpose, the purchasing unit shall make settlement with other taxing

units having an interest in the property (as defined in this subsection) in such manner and in

such amount as may be agreed upon by the governing bodies; and if no agreement can be

reached, the amount to be paid shall be determined by a resident judge of the superior court in

the district in which the property is situated.

Nothing in this section shall be construed as requiring the purchasing unit to secure the

approval of other interested taxing units before reselling the property or as requiring the

purchasing unit to pay other interested taxing units in full if the net income and resale price are

insufficient to make such payments.

Any taxing unit purchasing property at a foreclosure sale may, in the discretion of its

governing body, instead of following the foregoing provisions of this section, make full payment

of the purchase price, and thereafter it shall hold the property as sole owner in the same manner

as it holds other real property, subject only to taxes and special assessments, with penalties,

interest, and costs, to which the sale was made subject.

(c) Resale of Real Property Purchased by Taxing Units. – Real property purchased at a

tax foreclosure sale by a taxing unit may be resold at any time (for such price as the governing

body of the taxing unit may approve) at a sale conducted in the manner provided by law for sales

of other real property of the taxing unit. However, a purchasing taxing unit, in the discretion of

its governing body, may resell such property to the former owner or to any other person formerly

having an interest in the property at private sale for an amount not less than the taxing unit's

interest therein if it holds the property as sole owner or for an amount not less than the total

interests of all taxing units (other than special assessments due the taxing unit holding title) if it

holds the property for the benefit of all such units. (1939, c. 310, s. 1719; 1945, c. 635; 1947, c.

484, ss. 3, 4; 1951, c. 300, s. 1; c. 1036, s. 1; 1953, c. 176, s. 2; 1955, c. 908; 1967, c. 705, s. 1;

1971, c. 806, s. 1.)

§ 105-377. Time for contesting validity of tax foreclosure title.

Notwithstanding any other provisions of law prescribing the period for commencing an

action, no action or proceeding shall be brought to contest the validity of any title to real

property acquired by a taxing unit or by a private purchaser in any tax foreclosure action or

proceeding authorized by this Subchapter or by other laws of this State in force at the time the

title was acquired, nor shall any motion to reopen or set aside the judgment in any such tax

foreclosure action or proceeding be entertained after one year from the date on which the deed is

recorded. (1939, c. 310, s. 1721; 1971, c. 806, s. 1; 1977, c. 886, s. 2.)

§ 105-378. Limitation on use of remedies.

(a) Use of Remedies Barred. – No county or municipality may maintain an action or

procedure to enforce any remedy provided by law for the collection of taxes or the enforcement

of any tax liens (whether the taxes or tax liens are evidenced by the original tax receipts, tax


sales certificates, or otherwise) unless the action or procedure is instituted within 10 years from

the date the taxes became due.

(b) Not Applicable to Special Assessments. – The provisions of subsection (a), above,

shall not be construed to apply to the lien of special assessments.

(c) Repealed by Session Laws 1998-98, s. 26, effective August 14, 1998.

(d) Enforcement and Collection Delayed Pending Appeal. – When the board of county

commissioners or municipal governing body delivers a tax receipt to a tax collector for any

assessment that has been or is subsequently appealed to the county board of equalization and

review or the Property Tax Commission, the tax collector may not seek collection of taxes or

enforcement of a tax lien resulting from the assessment until the appeal has been finally

adjudicated. The tax collector, however, may send an initial bill or notice to the taxpayer. (1933,

c. 181, s. 7; c. 399; 1945, c. 832; 1947, c. 1065, s. 1; 1949, cc. 60, 269, 735; 1951, cc. 71, 306,

572; 1953, cc. 381, 427, 538, 645, 656, 752, 775, 1008; 1955, c. 1087; 1957, cc. 53, 678, 1123;

1959, cc. 373, 608; 1961, cc. 542, 695, 885; 1965, cc. 129, 294; 1967, c. 242; c. 321, s. 1; c. 422,

s. 1; 1969, c. 96; 1971, c. 806, s. 1; 1998-98, s. 26; 2006-30, s. 6; 2011-3, s. 3(b).)

Article 27.

Refunds and Remedies.

§ 105-379. Restriction on use of injunction and claim and delivery.

(a) Grounds for Injunction. – No court may enjoin the collection of any tax, the sale of

any tax lien, or the sale of any property for nonpayment of any tax imposed under the authority

of this Subchapter except upon a showing that the tax (or some part thereof) is illegal or levied

for an illegal or unauthorized purpose.

(b) No Order in Claim and Delivery. – No court may issue any order in claim and

delivery proceedings or otherwise for the taking of any personal property levied on or attached

by the tax collector under the authority of this Subchapter. (1901, c. 558, s. 30; Rev., s. 2855;

C.S., s. 7979; 1971, c. 806, s. 1.)

§ 105-380. No taxes to be released, refunded, or compromised.

(a) The governing body of a taxing unit is prohibited from releasing, refunding, or

compromising all or any portion of the taxes levied against any property within its jurisdiction

except as expressly provided in this Subchapter.

(b) Taxes that have been released, refunded, or compromised in violation of this section

shall be deemed to be unpaid and shall be collectible by any means provided by this Subchapter,

and the existence and priority of any tax lien on property shall not be affected by the

unauthorized release, refund, or compromise of the tax liability.

(c) Any tax that has been released, refunded, or compromised in violation of this section

may be recovered from any member or members of the governing body who voted for the

release, refund, or compromise by civil action instituted by any resident of the taxing unit, and

when collected, the recovered tax shall be paid to the treasurer of the taxing unit. The costs of

bringing the action, including reasonable attorneys' fees, shall be allowed the plaintiff in the

event the tax is recovered.

(d) The provisions of this section are not intended to restrict or abrogate the powers of a

board of equalization and review or any agency exercising the powers of such a board.


(e) (Expires July 1, 2016) The governing body of a municipality shall release any tax

levied under this Subchapter, without application from the taxpayer being required, on property

that was within the corporate limits of the municipality for six months or less prior to

deannexation from the municipality, and for which no notice of the tax has yet been sent to the

taxpayer. The release shall be made in accordance with the provisions of this Article. (1901, c.

558, s. 31; Rev., s. 2854; C.S., s. 7976; 1971, c. 806, s. 1; 1973, c. 564, s. 2; 2013-19, s. 1.)

§ 105-381. Taxpayer's remedies.

(a) Statement of Defense. – Any taxpayer asserting a valid defense to the enforcement of

the collection of a tax assessed upon his property shall proceed as hereinafter provided.

(1) For the purpose of this subsection, a valid defense shall include the following:

a. A tax imposed through clerical error;

b. An illegal tax;

c. A tax levied for an illegal purpose.

(2) If a tax has not been paid, the taxpayer may make a demand for the release of

the tax claim by submitting to the governing body of the taxing unit a written

statement of his defense to payment or enforcement of the tax and a request

for release of the tax at any time prior to payment of the tax.

(3) If a tax has been paid, the taxpayer, at any time within five years after said tax

first became due or within six months from the date of payment of such tax,

whichever is the later date, may make a demand for a refund of the tax paid by

submitting to the governing body of the taxing unit a written statement of his

defense and a request for refund thereof.

(b) Action of Governing Body. – Upon receiving a taxpayer's written statement of

defense and request for release or refund, the governing body of the taxing unit shall within 90

days after receipt of such request determine whether the taxpayer has a valid defense to the tax

imposed or any part thereof and shall either release or refund that portion of the amount that is

determined to be in excess of the correct tax liability or notify the taxpayer in writing that no

release or refund will be made. The governing body may, by resolution, delegate its authority to

determine requests for a release or refund of tax of less than one hundred dollars ($100.00) to the

finance officer, manager, or attorney of the taxing unit. A finance officer, manager, or attorney to

whom this authority is delegated shall monthly report to the governing body the actions taken by

him on requests for release or refund. All actions taken by the governing body or finance officer,

manager, or attorney on requests for release or refund shall be recorded in the minutes of the

governing body. If a release is granted or refund made, the tax collector shall be credited with the

amount released or refunded in his annual settlement.

(c) Suit for Recovery of Property Taxes. –

(1) Request for Release before Payment. – If within 90 days after receiving a

taxpayer's request for release of an unpaid tax claim under (a) above, the

governing body of the taxing unit has failed to grant the release, has notified

the taxpayer that no release will be granted, or has taken no action on the

request, the taxpayer shall pay the tax. He may then within three years from

the date of payment bring a civil action against the taxing unit for the amount

claimed.

(2) Request for Refund. – If within 90 days after receiving a taxpayer's request for

refund under (a) above, the governing body has failed to refund the full


amount requested by the taxpayer, has notified the taxpayer that no refund

will be made, or has taken no action on the request, the taxpayer may bring a

civil action against the taxing unit for the amount claimed. Such action may be

brought at any time within three years from the expiration of the period in

which the governing body is required to act.

(d) Civil Actions. – Civil actions brought pursuant to subsection (c) above shall be

brought in the appropriate division of the general court of justice of the county in which the

taxing unit is located. If, upon the trial, it is determined that the tax or any part of it was illegal or

levied for an illegal purpose, or excessive as the result of a clerical error, judgment shall be

rendered therefor with interest thereon at six percent (6%) per annum, plus costs, and the

judgment shall be collected as in other civil actions. (1901, c. 558, s. 30; Rev., s. 2855; C. S., s.

7979; 1971, c. 806, s. 1; 1973, c. 564, s. 3; 1977, c. 946, s. 2; 1985, c. 150, s. 1; 1987, c. 127.)


Article 28.

Special Duties to Pay Taxes.

§ 105-383. Fiduciaries to pay taxes.

(a) Duty to Pay. – It shall be the duty of every guardian, executor, administrator, agent,

trustee, receiver, or other fiduciary having care or control of any real or personal property to pay

the taxes thereon out of the trust funds in his hands.

(b) Liability for Failure to Pay. – Any fiduciary who fails to pay the taxes on property in

his care or control when trust funds are available to him for that purpose shall be personally

liable for the taxes. This liability may be enforced by a civil action brought in the name of the tax

collector of the taxing unit to which the taxes are owed against the fiduciary in an appropriate

division of the General Court of Justice of the county in which the taxing unit is located.

(c) Liability for Sale of Property. – Any fiduciary who suffers property in his care or

control to be sold by reason of his negligence in failing to pay the taxes thereon when available

funds were in his hands shall be liable to his ward, principal, or cestui que trust for all actual

damages incurred as a result of his neglect.

(d) Effect of Section. – This section shall not have the effect of relieving property and

estates held in trust or under the control of fiduciaries from the lien of property taxes. (1762, c.

69, s. 14; R.C., c. 54, s. 27; 1868-9, c. 201, s. 32; 1879, c. 71, s. 53; Code, ss. 1595, 3698; Rev.,

s. 2862; C.S., s. 7985; 1971, c. 806, s. 1.)

§ 105-384. Duties and liabilities of life tenant.

(a) If real or personal property is held by a tenant for life or by a tenant for the life of

another, it shall be the duty of the life tenant to pay the taxes imposed on the property.

(b) Any remainderman or reversioner of real or personal property who pays the taxes

thereon may recover the money so paid in an action against the life tenant of the property; in the

case of real property, the action may be brought only in the appropriate division of the General

Court of Justice of the county in which the real property is located.

(c) Any tenant for life of real or personal property who suffers the property to be

foreclosed and sold or sold under levy for failure to pay the taxes thereon shall be liable to the


remainderman or to the reversioner for any damages incurred. (1879, c. 71, ss. 53, 54; Code, ss.

3698, 3699; 1901, c. 558, s. 45; Rev., s. 2859; C.S., s. 7982; 1971, c. 806, s. 1.)

§ 105-385. Duty to pay taxes on real property; judicial sales; sales under powers;

governmental purchasers.

(a) Judicial Sales. – In all civil actions and special proceedings in which the sale of any

real property is ordered, the judgment shall provide for the payment of all taxes then constituting

a lien upon the property and all special assessments or installments thereof then due, and the tax

liens and special assessments shall be satisfied from the proceeds of the sale before the proceeds

are disbursed. The judgment in such a civil action or special proceeding shall adjust the

disbursements for taxes and special assessments between the parties to the action or special

proceeding in accordance with their respective rights.

(b) Sales under Powers. – Any person who sells real property under a power of sale

conferred upon him by a deed, will, power of attorney, mortgage, deed of trust, or assignment for

the benefit of creditors shall from the proceeds of the sale first satisfy all taxes constituting a lien

upon the real property and all special assessments or installments thereof then due unless the

notice of sale provided that the property would be sold subject to tax liens and special

assessments, and it was so sold.

(c) Governmental Purchasers. – Any agency, department, or institution of the State of

North Carolina and any county or municipal corporation that purchases real property shall satisfy

all taxes constituting a lien upon the property purchased and all special assessments or

installments thereof then due by deducting the amount of the taxes and special assessments from

the purchase price and paying it to the proper taxing unit or units. Any agency, department, or

institution of the State and any county or municipal corporation that fails to make the deductions

and payments required by this subsection (c) shall be liable to the taxing unit or units to which

the taxes and special assessments are owed for the amount thereof. This liability may be enforced

in a civil action brought by the taxing unit or units to which the taxes and special assessments are

owed in the appropriate trial division of the General Court of Justice of the county in which the

property is located; this remedy shall be in addition to any remedies the taxing unit may have

against the grantor of the property. (1901, c. 558, s. 47; Rev., s. 2857; C.S., s. 7980; 1929, c. 231,

s. 1; 1951, c. 252, s. 1; 1971, c. 806, s. 1.)

§ 105-386. Tax paid by holder of lien; remedy.

If any person having a lien or encumbrance of any kind upon real property shall pay the taxes

that constitute a lien upon the real property:

(1) He shall thereby acquire a lien upon the real property from the time of

payment, which lien shall be superior to all other liens and which may be

enforced by an action in the appropriate division of the General Court of

Justice of the county in which the real property is situated.

(2) He may, by an action for moneys paid to the use of the owner of the real

property at the time of payment, recover the amount paid. (1879, c. 71, s. 55;

Code, s. 3700; 1901, c. 558, s. 46; Rev., s. 2858; C.S., s. 7981; 1971, c. 806, s.

1.)

Article 29.


Validations.

§§ 105-387 through 105-392: Recodified as §§ 47-108.21 to 47-108.26 by Session Laws 1987,

c. 777, s. 4(1).

§ 105-393. Repealed by Session Laws 1987, c. 777, s. 4(2).

Article 30.

General Provisions.

§ 105-394. Immaterial irregularities.

Immaterial irregularities in the listing, appraisal, or assessment of property for taxation or in

the levy or collection of the property tax or in any other proceeding or requirement of this

Subchapter shall not invalidate the tax imposed upon any property or any process of listing,

appraisal, assessment, levy, collection, or any other proceeding under this Subchapter.

The following are examples of immaterial irregularities:

(1) The failure of list takers, tax supervisors, or members of boards of

equalization and review to take and subscribe the oaths required of them.

(2) The failure to sign the affirmation required on the abstract.

(3) The failure to list, appraise, or assess any property for taxation or to levy any

tax within the time prescribed by law.

(4) The failure of the board of equalization and review to meet or to adjourn

within the time prescribed by law or to give any required notice of its

meetings and adjournment.

(5) Any defect in the description upon any abstract, tax receipt, tax record, notice,

advertisement, or other document, of real or personal property, if the

description be sufficient to enable the tax collector or any person interested to

determine what property is meant by the description. (In such cases the tax

supervisor or tax collector may correct the description on the documents

bearing the defective description, and the correct description shall be used in

any documents later issued in tax foreclosure proceedings authorized by this

Subchapter.)

(6) The failure of the collector to advertise any tax lien.


(8) Any irregularity or informality in the order or manner in which tax liens on

real property are offered for sale.

(9) The failure to make or serve any notice mentioned in this Subchapter.

(10) The omission of a dollar mark or other designation descriptive of the value of

figures upon any document required by this Subchapter.

(11) Any other immaterial informality, omission, or defect on the part of any

person in any proceeding or requirement of this Subchapter. (1939, c. 310, s.

1715; 1965, c. 192, ss. 1, 2; 1971, c. 806, s. 1; 1983, c. 808, ss. 10, 11.)

§ 105-395. Application and effective date of Subchapter.

(a) The provisions of G.S. 105-333 through 105-344 (being Article 23 in this Subchapter)

shall first be applicable to public service company property to be listed or reported for taxation as


of January 1, 1972. Unless otherwise specifically provided herein, all other provisions of this

Machinery Act (being Subchapter II of Chapter 105 of the General Statutes) shall become

effective July 1, 1971, and shall apply to all taxes due and uncollected as of that date as well as

to those that shall become due thereafter.

(b) Repealed by Session Laws 1998-98, s. 27.

(c) It is the intent of the General Assembly to make the provisions of this Subchapter

uniformly applicable throughout the State, and to assure this objective all laws and clauses of

laws, including private and local acts, other than local acts relating to the selection of tax

collectors, in conflict with this Subchapter are repealed effective July 1, 1971. As used in this

section, the term "local acts" means any acts of the General Assembly that apply to one or more

counties by name, to one or more municipalities by name, or to all municipalities within one or

more named counties. (1971, c. 806, s. 1; 1993, c. 485, s. 19; 1998-98, s. 27.)

§ 105-395.1. Applicable date when due date falls on weekend or holiday.

When the last day for doing an act required or permitted by this Subchapter falls on a

Saturday, Sunday, or holiday, the act is considered to be done within the prescribed time limit if

it is done on the next business day. (1987, c. 777, s. 5.)


SUBCHAPTER III. COLLECTION OF TAXES.

Former Article 30.

General Provisions.


§ 105-404: Transferred to G.S. 105-32 by Session Laws 1971, c. 806, s. 2.


§§ 105-405.1 through 105-406: Repealed by Session Laws 1971, c. 806, s. 3.

§ 105-407: Transferred to G.S. 105-267.1 by Session Laws 1971, c. 806, s. 2.

Article 31.

Rights of Parties Adjusted.


§ 105-412: Transferred to G.S. 105-207 by Session Laws 1971, c. 806, s. 2.

Article 32.

Tax Liens.



Article 33.

Time and Manner of Collection.


Article 33A.

Agreements with United States or Other States.

§§ 105-417.1 through 105-417.3: Transferred to G.S. 105-268.1 through 105-268.3 by Session

Laws 1971, c. 806, s. 2.

Article 34.

Tax Sales.

Part 1. Sale of Realty.


Part 2. Refund of Tax Sales Certificates.




Article 35.

Sheriff's Settlement of Taxes.


SUBCHAPTER IV. LISTING OF AUTOMOBILES.

Article 35A.

Listing of Automobiles in Certain Counties.


SUBCHAPTER V. MOTOR FUEL TAXES.

Article 36.

Gasoline Tax.





§105-437. Repealed by Session Laws 1963, c. 1169, s. 6.

§§ 105-438 through 105-441.1: Repealed by Session Laws 1995, c. 390, s. 2.

§ 105-442: Repealed by Session Laws 1991 (Reg. Sess., 1992), c. 913, s. 3.


§§ 105-444 through 105-446.3: Repealed by Session Laws 1995, c. 390, s. 2.

§ 105-446.3:1. Repealed by Session Laws 1985, c. 261, s. 1.

§ 105-446.4. Repealed by Session Laws 1977, c. 802, s. 50.10.

§§ 105-446.5 through 105-449A: Repealed by Session Laws 1995, c. 390, s. 2.


Article 36A.

Special Fuels Tax.




§§ 105-449.30 through 105-449.31. Repealed by Session Laws 1985 (Reg. Sess., 1986), c. 937,

s. 19.

§ 105-449.32: Repealed by Session Laws 1993 (Reg. Sess., 1994), c. 745, s. 27.



Article 36B.

Tax on Motor Carriers.


§ 105-449.37. Definitions; tax liability; application.

(a) Definitions. – The following definitions apply in this Article:

(1) International Fuel Tax Agreement. – The Articles of Agreement adopted by

the International Fuel Tax Association, Inc., as amended as of July 1, 2013.

(2) Motor carrier. – A person who operates or causes to be operated on any

highway in this State a motor vehicle that is a qualified motor vehicle. The

term does not include the United States, a state, or a political subdivision of a

state.

(3) Motor vehicle. – Defined in G.S. 20-4.01.

(4) Operations. – The movement of a qualified motor vehicle by a motor carrier,

whether loaded or empty and whether or not operated for compensation.


(6) Qualified motor vehicle. – Defined in the International Fuel Tax Agreement.


(b) Liability. – A motor carrier who operates on one or more days of a reporting period is

liable for the tax imposed by this Article for that reporting period and is entitled to the credits

allowed for that reporting period.

(c) Application. – A motor carrier who operates a qualified motor vehicle in this State

must register the vehicle as provided in this Article and obtain the appropriate license and decals

for the vehicle. The Article applies to both an interstate motor carrier subject to the International

Fuel Tax Agreement and to an intrastate motor carrier. (1955, c. 823, s. 1; 1973, c. 476, s. 193;

1983, c. 713, s. 55; 1989, c. 7, s. 1; 1991, c. 182, s. 2; c. 487, s. 2; 1991 (Reg. Sess., 1992), c.

913, s. 8; 1993, c. 354, s. 28; 1999-337, s. 36; 2000-140, s. 74; 2008-134, s. 16; 2010-95, s. 27;

2014-3, s. 9.5(b).)

§ 105-449.38. Tax levied.

A road tax for the privilege of using the streets and highways of this State is imposed upon

every motor carrier on the amount of motor fuel or alternative fuel used by the carrier in its

operations within this State. The tax shall be at the rate established by the Secretary pursuant to

G.S. 105-449.80 or G.S. 105-449.136, as appropriate. This tax is in addition to any other taxes

imposed on motor carriers. (1955, c. 823, s. 2; 1969, c. 600, s. 22; 1981, c. 690, s. 3; 1985 (Reg.

Sess., 1986), c. 982, s. 16; 1995, c. 390, s. 16; 2001-205, s. 2; 2008-134, s. 17.)

§ 105-449.39. Credit for payment of motor fuel tax.

Every motor carrier subject to the tax levied by this Article is entitled to a credit on its

quarterly return for tax paid by the carrier on fuel purchased in the State. The amount of the

credit is determined using the flat cents-per-gallon rate plus the variable cents-per-gallon rate of

tax in effect during the quarter covered by the return. To obtain a credit, the motor carrier must

furnish evidence satisfactory to the Secretary that the tax for which the credit is claimed has been

paid.

If the amount of a credit to which a motor carrier is entitled for a quarter exceeds the motor

carrier's liability for that quarter, the excess is refundable in accordance with G.S. 105-241.7.

(1955, c. 823, s. 3; 1969, c. 600, s. 22; c. 1098; 1973, c. 476, s. 193; 1979, 2nd Sess., c. 1098;

1981, c. 690, s. 3; 1985 (Reg. Sess., 1986), c. 982, s. 17; 1987, c. 315; 1989, c. 692, s. 5.7; 1991,

c. 182, s. 3; c. 487, s. 3; 1998-146, s. 1; 1999-337, s. 37; 2005-435, s. 3; 2007-491, s. 40;

2010-95, s. 26(a).)


§ 105-449.40. Secretary may require bond.

(a) Authority. – The Secretary may require a motor carrier to furnish a bond when any of

the following occurs:

(1) The motor carrier fails to file a return within the time required by this Article.

(2) The motor carrier fails to pay a tax when due under this Article.

(3) After auditing the motor carrier's records, the Secretary determines that a bond

is needed to protect the State from loss in collecting the tax due under this

Article.

(b) Amount. – A bond required of a motor carrier under this section may not be more

than the larger of the following amounts:

(1) Five hundred dollars ($500.00).

(2) Four times the motor carrier's average tax liability or refund for a reporting

period.

A bond must be in the form required by the Secretary. (1955, c. 823, s. 4; 1967, c. 1110, s. 15;

1973, c. 476, s. 193; 1991, c. 487, s. 4; 2010-95, s. 26(b).)



The tax levied by this Article is due when a motor carrier files a quarterly return under G.S.

105-449.45. The amount of tax due is calculated on the amount of motor fuel or alternative fuel

used by the motor carrier in its operations within this State during the quarter covered by the

return. (1955, c. 823, s. 6; 1973, c. 476, s. 193; 1979, 2nd Sess., c. 1086, s. 2; 1983, c. 29, s. 2;

1991, c. 182, s. 4; 1999-337, s. 38; 2010-95, s. 26(c).)

§ 105-449.42A. Leased motor vehicles.

(a) Lessor in Leasing Business. – A lessor who is regularly engaged in the business of

leasing or renting motor vehicles without drivers for compensation is the motor carrier for a

leased or rented motor vehicle unless the lessee of the leased or rented motor vehicle gives the

Secretary written notice, by filing a return or otherwise, that the lessee is the motor carrier. In

that circumstance, the lessee is the motor carrier for the leased or rented motor vehicle.

Before a lessee gives the Secretary written notice under this subsection that the lessee is the

motor carrier, the lessee and lessor must make a written agreement for the lessee to be the motor

carrier. Upon request of the Secretary, the lessee must give the Secretary a copy of the

agreement.

(b) Independent Contractor. – The lessee of a motor vehicle that is leased from an

independent contractor is the motor carrier for the leased motor vehicle unless one of the

circumstances listed in this subsection applies. If either of these circumstances applies, the lessor

is the motor carrier for the leased motor vehicle.

(1) The motor vehicle is leased for fewer than 30 days.

(2) The motor vehicle is leased for at least 30 days and the lessor gives the

Secretary written notice, by filing a return or otherwise, that the lessor is the

motor carrier. Before a lessor gives the Secretary written notice that the lessor

is the motor carrier, the lessor and lessee must make a written agreement for


the lessor to be the motor carrier. Upon request of the Secretary, the lessor

must give the Secretary a copy of the agreement.

(c) Liability. – An independent contractor who leases a motor vehicle to another for

fewer than 30 days is liable for compliance with this Article and the person to whom the motor

vehicle is leased is not liable. Otherwise, both the lessor and lessee of a motor vehicle are jointly

and severally liable for compliance with this Article. (1983, c. 29, s. 3; 1985 (Reg. Sess., 1986),

c. 826, s. 11; 1991, c. 487, s. 5; 1991 (Reg. Sess., 1992), c. 913, s. 9; 2010-95, s. 26(d).)

§ 105-449.43. Application of tax proceeds.

Tax revenue collected under this Article and tax refunds or credits allowed under this Article

shall be allocated among and charged to the funds and accounts listed in G.S. 105-449.125 in

accordance with that section. (1955, c. 823, s. 7; 1981 (Reg. Sess., 1982), c. 1211, s. 3; 1989, c.

692, s. 1.16; 1995, c. 390, s. 17.)

§ 105-449.44. How to determine the amount of fuel used in the State; presumption of

amount used.

(a) Calculation. – The amount of motor fuel or alternative fuel a motor carrier uses in its

operations in this State for a reporting period is the number of miles the motor carrier travels in

this State during that period divided by the calculated miles per gallon for the motor carrier for

all qualified motor vehicles during that period.

(b) Presumption. – The Secretary must check returns filed under this Article against the

weigh station records and other records of the Division of Motor Vehicles of the Department of

Transportation and the State Highway Patrol of the Department of Public Safety concerning

motor carriers to determine if motor carriers that are operating in this State are filing the returns

required by this Article. If the records indicate that a motor carrier operated in this State in a

quarter and either did not file a return for that quarter or understated its mileage in this State on a

return filed for that quarter by at least twenty-five percent (25%), the Secretary may assess the

motor carrier for an amount based on the motor carrier's presumed operations. The motor carrier

is presumed to have mileage in this State equal to 10 trips of 450 miles each for each of the

motor carrier's qualified motor vehicles and to have fuel usage of four miles per gallon.

(c) Vehicles. – The number of qualified motor vehicles of a motor carrier that is

registered under this Article is the number of sets of decals issued to the carrier. The number of

qualified motor vehicles of a carrier that is not registered under this Article is the number of

qualified motor vehicles registered by the motor carrier in the carrier's base state under the

International Registration Plan. (1955, c. 823, s. 8; 1995, c. 390, s. 35; 1999-337, s. 39;

2000-173, s. 12; 2005-435, s. 4; 2008-134, s. 18; 2010-95, s. 26(e); 2011-145, s. 19.1(g).)

§ 105-449.45. Returns of carriers.

(a) Return. – A motor carrier must report its operations to the Secretary on a quarterly

basis unless subsection (b) of this section exempts the motor carrier from this requirement. A

quarterly return covers a calendar quarter and is due by the last day in April, July, October, and

January. A return must be filed in the form required by the Secretary.

(b) Exemptions. – A motor carrier is not required to file a quarterly return if any of the

following applies:

(1) All the motor carrier's operations during the quarter were made under a

temporary permit issued under G.S. 105-449.49.


(2) The motor carrier is an intrastate motor carrier, as indicated on the motor

carrier's application for registration with the Secretary.

(c) Informational Returns. – A motor carrier must file with the Secretary any

informational returns concerning its operations that the Secretary requires.

(d) Penalties. – A motor carrier that fails to file a return under this section by the required

date is subject to a penalty of fifty dollars ($50.00). (1955, c. 823, s. 9; 1973, c. 476, s. 193;

1979, 2nd Sess., c. 1086, s. 2; 1981 (Reg. Sess., 1982), c. 1254, s. 2; 1989 (Reg. Sess., 1990), c.

1050, s. 1; 1991, c. 182, s. 5; 1995, c. 17, s. 13.1; 1998-212, s. 29A.14(q); 1999-337, s. 40;

2009-445, s. 31(a); 2010-95, s. 26(f).)

§ 105-449.46. Inspection of books and records.

The Secretary and his authorized agents and representatives shall have the right at any

reasonable time to inspect the books and records of any motor carrier subject to the tax imposed

by this Article or to the registration fee imposed by Article 3 of Chapter 20 of the General

Statutes. (1955, c. 823, s. 10; 1973, c. 476, s. 193; 2005-435, s. 5.)

§ 105-449.47. Registration of vehicles.

(a) Requirement. – A motor carrier may not operate or cause to be operated in this State a

qualified motor vehicle unless both the motor carrier and at least one qualified motor vehicle are

registered as provided in this subsection. This subsection applies to a motor carrier that operates

a recreational vehicle that is considered a qualified motor vehicle. A motor carrier that is subject

to the International Fuel Tax Agreement must register with the motor carrier's base state

jurisdiction. A motor carrier that is not subject to the International Fuel Tax Agreement must

register with the Secretary for purposes of the tax imposed by this Article.

(a1) Registration and Decal. – When the Secretary registers a motor carrier, the Secretary

must issue a registration card for the motor carrier and a set of decals for each qualified motor

vehicle the motor carrier registers. A motor carrier must keep records of decals issued to it and

must be able to account for all decals it receives from the Secretary. Registrations and decals

issued by the Secretary are for a calendar year. All decals issued by the Secretary remain the

property of the State. The Secretary may revoke a registration or a decal when a motor carrier

fails to comply with this Article or Article 36C or 36D of this Subchapter.

A motor carrier must carry a copy of its registration in each motor vehicle operated by the

motor carrier when the vehicle is in this State. A motor vehicle must clearly display one decal on

each side of the vehicle at all times. A decal must be affixed to the qualified motor vehicle for

which it was issued in the place and manner designated by the authority that issued it.

(b) Exemption. – This section does not apply to the operation of a qualified motor vehicle

that is registered in another state and is operated temporarily in this State by a public utility, a

governmental or cooperative provider of utility services, or a contractor for one of these entities

for the purpose of restoring utility services in an emergency outage. (1955, c. 823, s. 11; 1973, c.

746, s. 193; 1983, c. 713, s. 56; 1985 (Reg. Sess., 1986), c. 937, s. 20; 1989, c. 692, s. 6.2; 1991,

c. 487, s. 6; 1995, c. 50, s. 5; c. 390, s. 18; 1999-337, s. 41; 2002-108, s. 3; 2004-170, s. 24;

2005-435, s. 6; 2008-134, s. 19; 2014-3, s. 9.5(c).)

§ 105-449.47A. Reasons why the Secretary can deny an application for a registration and

decals.


The Secretary may refuse to register and issue a decal to an applicant that does not meet the

requirements set out in G.S. 105-449.69(b) or that has done any of the following:

(1) Had a registration issued under Chapter 105 or Chapter 119 of the General

Statutes cancelled by the Secretary for cause.

(2) Had a registration issued by another jurisdiction, pursuant to the International

Fuel Tax Agreement, cancelled for cause.


(4) Been convicted of any other offense that indicates that the applicant may not

comply with this Article if registered and issued a decal.

(5) Failed to remit payment for a tax debt under Chapter 105 or Chapter 119 of

the General Statutes. The term "tax debt" has the same meaning as defined in

G.S. 105-243.1.

(6) Failed to file a return due under Chapter 105 or Chapter 119 of the General

Statutes. (2005-435, s. 7; 2008-134, s. 20; 2009-445, s. 32; 2010-95, s. 28.)

§ 105-449.48: Repealed by Session Laws 2006-162, s. 12(c), effective July 24, 2006.

§ 105-449.49. Temporary permits.

(a) Issuance. – Upon application to the Secretary and payment of a fee of fifty dollars

($50.00), a motor carrier may obtain a temporary permit authorizing the carrier to operate a

vehicle in the State for three days without registering the vehicle in accordance with G.S.

105-449.47. A motor carrier to whom a temporary permit has been issued may elect not to report

its operation of the vehicle during the three-day period. Fees collected under this subsection are

credited to the Highway Fund.

(b) Refusal. – The Secretary may refuse to issue a temporary permit to any of the

following:

(1) A motor carrier whose registration has been withheld or revoked.

(2) A motor carrier who the Secretary determines is evading payment of tax

through the successive purchase of temporary permits. (1955, c. 823, s. 13;

1973, c. 476, s. 193; 1979, c. 11; 1981 (Reg. Sess., 1982), c. 1254, s. 1; 1983,

c. 713, s. 58; 1991, c. 182, s. 6; c. 487, s. 7; 1991 (Reg. Sess., 1992), c. 913, s.

10; 2003-349, s. 10.1; 2006-162, s. 12(d).)


§ 105-449.51. Violations declared to be misdemeanors.

Any person who operates or causes to be operated on a highway in this State a qualified

motor vehicle that does not carry a registration card as required by this Article, does not properly

display a decal as required by this Article, or is not registered in accordance with this Article

commits a Class 3 misdemeanor and is punishable by a fine of two hundred dollars ($200.00).

Each day's operation in violation of this section constitutes a separate offense. (1955, c. 823, s.

15; 1973, c. 476, s. 193; 1983, c. 713, s. 59; 1993, c. 539, s. 734; 1994, Ex. Sess., c. 24, s. 14(c);

2005-435, s. 8; 2008-134, s. 22.)

§ 105-449.52. Civil penalties applicable to motor carriers.

(a) Penalty. – A motor carrier who does any of the following is subject to a civil penalty:


(1) Operates in this State or causes to be operated in this State a qualified motor

vehicle that either fails to carry the registration card required by this Article or

fails to display a decal in accordance with this Article. The amount of the

penalty is one hundred dollars ($100.00).

(2) Is unable to account for a decal the Secretary issues the motor carrier, as

required by G.S. 105-449.47. The amount of the penalty is one hundred

dollars ($100.00) for each decal for which the carrier is unable to account.

(3) Displays a decal on a qualified motor vehicle operated by a motor carrier that

was not issued to the carrier by the Secretary under G.S. 105-449.47. The

amount of the penalty is one thousand dollars ($1,000) for each decal

unlawfully obtained. Both the licensed motor carrier to whom the Secretary

issued the decal and the motor carrier displaying the unlawfully obtained

decal are jointly and severally liable for the penalty under this subdivision.

(a1) Payment. – A penalty imposed under this section is payable to the agency that

assessed the penalty. When a qualified motor vehicle is found to be operating without a

registration card or a decal or with a decal the Secretary did not issue for the vehicle, the

qualified motor vehicle may not be driven for a purpose other than to park it until the penalty

imposed under this section is paid unless the officer that imposes the penalty determines that

operating it will not jeopardize collection of the penalty.

(b) Penalty [Reduction]. – The Secretary may reduce or waive the penalty as provided

under G.S. 105-449.119. (1955, c. 823, s. 16; 1957, c. 948; 1973, c. 476, s. 193; 1975, c. 716, s.

5; 1981, c. 690, s. 18; 1983, c. 713, s. 60; 1991, c. 42, s. 14; 1991 (Reg. Sess., 1992), c. 913, s.

11; 1998-146, s. 2; 1999-337, s. 43; 2002-108, s. 4; 2004-170, s. 25; 2007-527, s. 16(a);

2008-134, ss. 8, 23; 2014-3, s. 9.8(a).)


§ 105-449.54. Commissioner of Motor Vehicles made process agent of nonresident motor

carriers.

By operating a motor vehicle on the highways of this State, a nonresident motor carrier

consents to the appointment of the Commissioner of Motor Vehicles as its attorney in fact and

process agent for all summonses or other lawful process or notice in any action, assessment, or

other proceeding under this Chapter. (1955, c. 823, s. 18; 2004-170, s. 26.)


§ 105-449.57. Cooperative agreements between jurisdictions.

(a) Authority. – The Secretary may enter into cooperative agreements with other

jurisdictions for exchange of information in administering the tax imposed by this Article. No

agreement, arrangement, declaration, or amendment to an agreement is effective until stated in

writing and approved by the Secretary.

(b) Content. – An agreement may provide for determining the base state for motor

carriers, records requirements, audit procedures, exchange of information, persons eligible for

tax licensing, defining qualified motor vehicles, determining if bonding is required, specifying

reporting requirements and periods, including defining uniform penalty and interest rates for late

reporting, determining methods for collecting and forwarding of motor carrier taxes and


penalties to another jurisdiction, and any other provisions that will facilitate the administration of

the agreement.

(c) Disclosure. – In accordance with G.S. 105-259, the Secretary may, as required by the

terms of an agreement, forward to officials of another jurisdiction any information in the

Department's possession relative to the use of motor fuel or alternative fuel by any motor carrier.

The Secretary may disclose to officials of another jurisdiction the location of offices, motor

vehicles, and other real and personal property of motor carriers.

(d) Audits. – An agreement may provide for each jurisdiction to audit the records of

motor carriers based in the jurisdiction to determine if the taxes due each jurisdiction are

properly reported and paid. Each jurisdiction must forward the findings of the audits performed

on motor carriers based in the jurisdiction to each jurisdiction in which the carrier has taxable use

of motor fuel or alternative fuel. For motor carriers not based in this State, the Secretary may

utilize the audit findings received from another jurisdiction as the basis upon which to propose

assessments of taxes against the carrier as though the audit had been conducted by the Secretary.

Penalties and interest must be assessed at the rates provided in the agreement.

No agreement entered into pursuant to this section may preclude the Department from

auditing the records of any motor carrier covered by this Chapter.

The provisions of Article 9 of this Chapter apply to any assessment or order made under this

section.

(e) Restriction. – The Secretary may not enter into any agreement that would increase or

decrease taxes and fees imposed under Subchapter V of Chapter 105 of the General Statutes.

Any provision to the contrary is void. (1989, c. 667, s. 1; 1993, c. 485, s. 36; 1995 (Reg. Sess.,

1996), c. 647, s. 50; 1999-337, s. 42.)



Article 36C.

Gasoline, Diesel, and Blends.




(1) Additive. – A de minimus amount of product that is added or mixed with

motor fuel. Examples of an additive include fuel system detergent, an

oxidation inhibitor, gasoline antifreeze, or an octane enhancer.

(2) Aviation gasoline. – Fuel blended or produced specifically for use in an

aircraft motor.

(3) Biodiesel. – Any fuel or mixture of fuels derived in whole or in part from

agricultural products or animal fats or wastes from these products or fats.

(4) Biodiesel provider. – A person who does any of the following:

a. Produces an average of no more than 500,000 gallons of biodiesel per

month during a calendar year. A person who produces more than this

amount is a refiner.


b. Imports biodiesel outside the terminal transfer system by means of a

transport truck, a railroad tank car, or a tank wagon.

(5) Blended fuel. – A mixture composed of gasoline or diesel fuel and another

liquid, other than an additive, that can be used as a fuel in a highway vehicle.

(6) Blender. – A person who produces blended fuel outside the terminal transfer

system.

(7) Bonded importer. – A person, other than a supplier, who imports by transport

truck or another means of transfer outside the terminal transfer system motor

fuel removed from a terminal located in another state in one or more of the


a. The state from which the fuel is imported does not require the seller of

the fuel to collect motor fuel tax on the removal of the fuel at that

state's rate or the rate of the destination state.

b. The supplier of the fuel is not an elective supplier.

c. The supplier of the fuel is not a permissive supplier.

(8) Bulk end-user. – A person who maintains storage facilities for motor fuel and

uses part or all of the stored fuel to operate a highway vehicle.

(9) Bulk plant. – A motor fuel storage and distribution facility that is not a

terminal and from which motor fuel may be removed at a rack.


(11) Destination state. – The state, territory, or foreign country to which motor fuel

is directed for delivery into a storage facility, a receptacle, a container, or a

type of transportation equipment for the purpose of resale or use.

(12) Diesel fuel. – Any liquid, other than gasoline, that is suitable for use as a fuel

in a diesel-powered highway vehicle. The term includes biodiesel, fuel oil,

heating oil, high-sulfur dyed diesel fuel, and kerosene. The term does not

include jet fuel.

(13) Distributor. – A person who does one or more of the activities listed in this

subdivision. The term does not include a person who sells motor fuel only at

retail.

a. Produces, refines, blends, compounds, or manufactures motor fuel.

b. Transports motor fuel into a state or exports motor fuel out of a state.

c. Engages in the distribution of motor fuel primarily by tank car or tank

truck or both.

d. Operates a bulk plant where the person has active motor fuel bulk

storage.

(14) Diversion. – The movement of motor fuel from a terminal to a state other than

the destination state indicated on the original bill of lading.

(15) Dyed diesel fuel. – Diesel fuel that meets the dyeing and marking

requirements as set out in 26 C.F.R. § 48.4082.1.

(16) Elective supplier. – A supplier that is required to be licensed in this State and

that elects to collect the excise tax due this State on motor fuel that is removed

by the supplier at a terminal located in another state and has this State as its

destination state.


(17) Exempt card or code. – A credit card or an access code that enables the person

to whom the card or code is issued to buy motor fuel at retail without paying

the motor fuel excise tax on the fuel.

(18) Export. – To obtain motor fuel in this State for sale or other distribution in

another state. In applying this definition, motor fuel delivered out-of-state by

or for the seller constitutes an export by the seller and motor fuel delivered

out-of-state by or for the purchaser constitutes an export by the purchaser.

(19) Fuel alcohol. – Alcohol, methanol, or fuel grade ethanol.

(20) Fuel alcohol provider. – A person who does any of the following:

a. Produces an average of no more than 500,000 gallons of fuel alcohol

per month during a calendar year. A person who produces more than

this amount is a refiner.

b. Imports fuel alcohol outside the terminal transfer system by means of a

transport truck, a railroad tank car, or a tank wagon.

(21) Gasohol. – A blended fuel composed of gasoline and fuel grade ethanol.

(22) Gasoline. – Any of the following:

a. All products that are commonly or commercially known or sold as

gasoline and are suitable for use as a fuel in a highway vehicle, other

than products that have an American Society for Testing Materials

octane number of less than 75 as determined by the motor method. The

term does not include aviation gasoline.

b. A petroleum product component of gasoline, such as naptha,

reformate, or toluene.

c. Gasohol.

d. Fuel alcohol.

(23) Gross gallons. – The total amount of motor fuel measured in gallons,

exclusive of any temperature, pressure, or other adjustments.

(24) Highway. – Defined in G.S. 20-4.01(13).

(25) Highway vehicle. – A self-propelled vehicle that is designed for use on a

highway.

(26) Import. – To bring motor fuel into this State by any means of conveyance

other than in the fuel supply tank of a highway vehicle. In applying this

definition, motor fuel delivered into this State from out-of-state by or for the

seller constitutes an import by the seller, and motor fuel delivered into this

State from out-of-state by or for the purchaser constitutes an import by the

purchaser.

(27) In-State supplier. – Either of the following:

a. A supplier that is required to have a license and elects not to collect the

excise tax due this State on motor fuel that is removed by the supplier

at a terminal located in another state and has this State as its

destination state.

b. A supplier that does business only in this State.

(28) Jet fuel. – Kerosene that meets all of the following requirements:

a. Has a maximum distillation temperature of 400 degrees Fahrenheit at

the ten percent (10%) recovery point and a final maximum boiling

point of 572 degrees Fahrenheit.


b. Meets American Society Testing Materials Specification D 1655 and

Military Specifications MIL-T-5624P and MIL-T-83133D, Grades

JP-5 and JP-8.

(29) Kerosene. – Petroleum oil that is free from water, glue, and suspended matter

and that meets the specifications and standards adopted under G.S. 119-26 by

the Gasoline and Oil Inspection Board.

(30) Marine vessel. – A ship, boat, or other watercraft used or capable of being

used to move in or through a waterway.

(31) Motor fuel. – Gasoline, diesel fuel, and blended fuel.

(32) Motor fuel rate. – The rate of tax set in G.S. 105-449.80.

(33) Motor fuel transporter. – A person who transports motor fuel by pipeline,

transport truck, railroad tank car, or marine vessel.

(34) Net gallons. – The amount of motor fuel measured in gallons when corrected

to a temperature of 60 degrees Fahrenheit and a pressure of 14 7/10 pounds

per square inch.

(35) Occasional importer. – One or more of the following that imports motor fuel

by any means outside the terminal transfer system:

a. A distributor that imports motor fuel on an average basis of no more

than once a month during a calendar year.

b. A bulk end-user that acquires motor fuel for import from a bulk plant

and is not required to be licensed as a bonded importer.

c. A distributor that imports motor fuel for use in a race car.

(36) Permissive supplier. – An out-of-state supplier that elects, but is not required,

to have a supplier's license under this Article.


(38) Pipeline. – A fuel distribution system that moves motor fuel, in bulk, through

a pipe either from a refinery to a terminal or from a terminal to another

terminal.

(39) Position holder. – The person who holds the inventory position on the motor

fuel in a terminal, as reflected on the records of the terminal operator. A

person holds the inventory position on the motor fuel when that person has a

contract with the terminal operator for the use of storage facilities and

terminaling services for fuel at the terminal. The term includes a terminal

operator who owns fuel in the terminal.

(40) Rack. – A mechanism for delivering motor fuel from a refinery, a terminal, or

a bulk plant into a transport truck, a railroad tank car, or another means of

transfer that is outside the terminal transfer system.

(41) Refiner. – A person who owns, operates, or controls a refinery. The term

includes a person who produces an average of more than 500,000 gallons of

fuel alcohol or biodiesel a month during a calendar year.

(42) Refinery. – A facility used to process crude oil, unfinished oils, natural gas

liquids, or other hydrocarbons into motor fuel and from which fuel may be

removed by pipeline or vessel or at a rack. The term does not include a facility

that produces only blended fuel or gasohol.

(43) Removal. – A physical transfer other than by evaporation, loss, or destruction.

A physical transfer to a transport truck or another means of conveyance


outside the terminal transfer system is complete upon delivery into the means

of conveyance.

(44) Retailer. – A person who maintains storage facilities for motor fuel and who

sells the fuel at retail or dispenses the fuel at a retail location.


(46) Supplier. – Any of the following:

a. A position holder or a person who receives motor fuel pursuant to a

two-party exchange.

b. A fuel alcohol provider.

c. A biodiesel provider.

d. A refiner.

(47) System transfer. – Either of the following:

a. A transfer of motor fuel within the terminal transfer system.

b. A transfer, by transport truck or railroad tank car, of fuel grade

ethanol.

(48) Tank wagon. – A truck that is not a transport truck and is designed or used to

carry at least 1,000 gallons of motor fuel.

(49) Tank wagon importer. – A person who imports only by means of a tank

wagon motor fuel that is removed from a terminal or a bulk plant located in

another state.

(50) Tax. – An inspection or other excise tax on motor fuel and any other fee or

charge imposed on motor fuel on a per-gallon basis.

(51) Terminal. – A motor fuel storage and distribution facility that has been

assigned a terminal control number by the Internal Revenue Service, is

supplied by pipeline or marine vessel, and from which motor fuel, jet fuel, or

aviation gasoline may be removed at a rack.

(52) Terminal operator. – A person who owns, operates, or otherwise controls a

terminal.

(53) Terminal transfer system. – The motor fuel distribution system consisting of

refineries, pipelines, marine vessels, and terminals. The term has the same

meaning as "bulk transfer/terminal system" under 26 C.F.R. § 48.4081-1.

(54) Transmix. – Either of the following:

a. The buffer or interface between two different products in a pipeline

shipment.

b. A mix of two different products within a refinery or terminal that

results in an off-grade mixture.

(55) Transport truck. – A tractor trailer designed or used to transport loads of

motor fuel over a highway.

(56) Trustee. – A person who is licensed as a supplier and who receives tax

payments from and on behalf of a licensed distributor or licensed importer for

remittance to the Secretary.

(57) Two-party exchange. – A transaction in which motor fuel is transferred from

one licensed supplier to another licensed supplier pursuant to an exchange

agreement under which the supplier that is the position holder agrees to

deliver motor fuel to the other supplier or the other supplier's customer at the

rack of the terminal at which the delivering supplier is the position holder.


(58) User. – A person who owns or operates a licensed highway vehicle that has a

registered gross vehicle weight of at least 10,001 pounds and who does not

maintain storage facilities for motor fuel. (1995, c. 390, s. 3; 1995 (Reg.

Sess., 1996), c. 647, ss. 1, 2; 1998-146, s. 3; 2000-173, ss. 13(a), 14(a);

2001-414, s. 27; 2002-108, ss. 5, 6; 2003-349, s. 10.2; 2004-170, s. 27;

2006-162, s. 14(a); 2008-134, s. 24.)

§ 105-449.61. Tax restrictions; administration.

(a) No Local Tax. – A county or city may not impose a tax on the sale, distribution, or

use of motor fuel, except motor fuel for which a refund of the per gallon excise tax is allowed

under G.S. 105-449.105A or G.S. 105-449.107.

(b) No Double Tax. – The tax imposed by this Chapter applies only once on the same

motor fuel.

(c) Administration. – Article 9 of this Chapter applies to this Article. (1995, c. 390, s. 3;

2014-3, s. 9.6.)

§ 105-449.62. Nature of tax.

This Article imposes a tax on motor fuel to provide revenue for the State's transportation

needs and for the other purposes listed in Part 7 of this Article. The tax is collected from the

supplier or importer of the fuel because this method is the most efficient way to collect the tax.

The tax is designed, however, to be paid ultimately by the person who consumes the fuel. The

tax becomes a part of the cost of the fuel and is consequently paid by those who subsequently

purchase and consume the fuel. (1997-60, s. 1.)



Part 2. Licensing.

§ 105-449.65. List of persons who must have a license.

(a) License. – A person may not engage in business in this State as any of the following

unless the person has a license issued by the Secretary authorizing the person to engage in that

business:

(1) A refiner.

(2) A supplier.

(3) A terminal operator.

(4) An importer.

(5) An exporter.

(6) A blender.

(7) A motor fuel transporter who transports motor fuel for hire.



(10) A distributor who purchases motor fuel from an elective or permissive

supplier at an out-of-state terminal for import into this State.


(b) Multiple Activity. – A person who is engaged in more than one activity for which a

license is required must have a separate license for each activity, unless one of the following

subdivisions provides otherwise.

(1) Supplier. – A person who is licensed as a supplier is considered to have a

license as a distributor. A person who is licensed as a supplier and is a

biodiesel provider is considered to have a license as a blender.

(2) Importer. – A person who is licensed as an occasional importer or a tank

wagon importer is not required to obtain a separate license as a distributor

unless the importer is also purchasing motor fuel, at the terminal rack, from an

elective or permissive supplier who is authorized to collect and remit the tax

to the State.

(3) Distributor. – A person who is licensed as a distributor is not required to

obtain a separate license as an importer if the distributor acquires fuel for

import only from an elective supplier or a permissive supplier and is not

required to obtain a separate license as an exporter. (1995, c. 390, s. 3; 1995

(Reg. Sess., 1996), c. 647, s. 3; 1997-60, s. 2; 1999-438, ss. 20, 21; 2003-349,

s. 10.3; 2005-435, s. 9; 2006-162, s. 13(a); 2008-134, s. 25.)

§ 105-449.66. Importer licensing.

An applicant for a license as an importer must indicate on the application the type of importer

license sought. The types of importers are bonded importer, occasional importer, and tank wagon

importer.

A person may not be licensed as more than one type of importer. A bulk end-user that

imports motor fuel from a terminal of a supplier that is not an elective or a permissive supplier

must be licensed as a bonded importer. A bulk end-user that imports motor fuel from a bulk plant

and is not required to be licensed as a bonded importer must be licensed as an occasional

importer. A bulk end-user that imports motor fuel only from a terminal of an elective or a

permissive supplier is not required to be licensed as an importer. (1995, c. 390, s. 3; 1995 (Reg.

Sess., 1996), c. 647, s. 4; 1997-60, s. 3; 2008-134, s. 26.)

§ 105-449.67. List of persons who may obtain a license.

A person who is engaged in business as any of the following may obtain a license issued by

the Secretary for that business:

(1) A distributor who is not required to be licensed under G.S. 105-449.65.

(2) A permissive supplier. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s.

5; 1997-60, s. 4; 2003-349, s. 10.4.)

§ 105-449.68. Restrictions on who can get a license as a distributor.

A bulk end-user of motor fuel may not be licensed as a distributor unless the bulk end-user

also acquires motor fuel from a supplier or from another distributor for subsequent sale. This

restriction does not apply to a bulk end-user that was licensed as a distributor on January 1, 1996.

If a distributor license held by a bulk end-user on January 1, 1996, is subsequently cancelled, the

bulk end-user is subject to the restriction set in this section. (1995, c. 390, s. 3; 2000-173, s.

14(b); 2008-134, s. 27.)

§ 105-449.69. How to apply for a license.


(a) General. – To obtain a license, an applicant must file an application with the

Secretary on a form provided by the Secretary. An application must include the applicant's name,

address, federal employer identification number, and any other information required by the

Secretary.

(b) Most Licenses. – An applicant for a license as a refiner, a supplier, a terminal

operator, an importer, a blender, or a distributor must meet the following requirements:

(1) If the applicant is a corporation, the applicant must either be incorporated in


(2) If the applicant is a limited liability company, the applicant must either be

organized in this State or be authorized to transact business in this State.

(3) If the applicant is a limited partnership, the applicant must either be formed in


(4) If the applicant is an individual or a general partnership, the applicant must

designate an agent for service of process and give the agent's name and

address.

(c) Federal Certificate. – An applicant for a license as a refiner, a supplier, a terminal

operator, or a blender must have a federal Certificate of Registry that is issued under § 4101 of

the Code and authorizes the applicant to enter into federal tax-free transactions in taxable motor

fuel in the terminal transfer system. An applicant that is required to have a federal Certificate of

Registry must include the registration number of the certificate on the application for a license

under this section.

An applicant for a license as an importer, an exporter, or a distributor that has a federal

Certificate of Registry issued under § 4101 of the Code must include the registration number of

the certificate on the application for a license under this section.

(d) Import Activity. – An applicant for a license as an importer or as a distributor must

list on the application each state from which the applicant intends to import motor fuel and, if

required by a state listed, must be licensed or registered for motor fuel tax purposes in that state.

If a state listed requires the applicant to be licensed or registered, the applicant must give the

applicant's license or registration number in that state.

(e) Export Activity. – An applicant for a license as an exporter must designate an agent

located in North Carolina for service of process and must give the agent's name and address. An

applicant for a license as an exporter or as a distributor must list on the application each state to

which the applicant intends to export motor fuel received in this State by means of a transfer that

is outside the terminal transfer system and, if required by a state listed, must be licensed or

registered for motor fuel tax purposes in that state. If a state listed requires the applicant to be

licensed or registered, the applicant must give the applicant's license or registration number in

that state. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 6; 2003-349, s. 10.5; 2005-435,

s. 10; 2008-134, s. 28.)

§ 105-449.70. Supplier election to collect tax on out-of-state removals.

(a) Election. – An applicant for a license as a supplier may elect on the application to

collect the excise tax due this State on motor fuel that is removed by the supplier at a terminal

located in another state and has this State as its destination state. The Secretary must provide for

this election on the application form. A supplier that makes the election allowed by this section is

an elective supplier. A supplier that does not make the election allowed by this section is an

in-State supplier.


A supplier that does not make the election on the application for a supplier's license may

make the election later by completing an election form provided by the Secretary. A supplier that

does not make the election may not act as an elective supplier for motor fuel that is removed at a

terminal in another state and has this State as its destination state.

(b) Effect. – A supplier that makes the election allowed by this section agrees to all of the

following with respect to motor fuel that is removed by the supplier at a terminal located in

another state and has this State as its destination state:

(1) To collect the excise tax due this State on the fuel and to waive any defense

that the State lacks jurisdiction to require the supplier to collect the excise tax

due this State under this Article on the fuel.

(2) To report and pay the tax due on the fuel in the same manner as if the removal

had occurred at a terminal located in this State.

(3) To keep records of the removal of the fuel and submit to audits concerning the

fuel as if the removal had occurred at a terminal located in this State.

(4) To report removals of fuel received by a person who is not licensed in the

state where the removal occurred.

(c) Limited Jurisdiction. – A supplier that makes the election allowed by this section

acknowledges that the State imposes the requirements listed in subsection (b) of this section on

the supplier under its general police power set out in Article 3 of Chapter 119 of the General

Statutes to regulate the quality of motor fuel and thereby promote public health and safety. A

supplier that makes the election allowed by this section submits to the jurisdiction of the State

only for the administration of this Article. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, ss.

7, 8; 2008-134, s. 29.)

§ 105-449.71. Permissive supplier election to collect tax on out-of-state removals.

(a) Election. – An out-of-state supplier that is not required to have a license under this

Part may elect to have a license and thereby become a permissive supplier. An out-of-state

supplier that does not make this election may not act as a permissive supplier for motor fuel that

is removed at a terminal in another state and has this State as its destination state.

(b) Effect. – By obtaining a license as a permissive supplier, the permissive supplier

agrees to be subject to the same requirements as a supplier and to all of the following with

respect to motor fuel that is removed by the permissive supplier at a terminal located in another

state and has this State as its destination state:

(1) To collect the excise tax due this State on the fuel and to waive any defense

that the State lacks jurisdiction to require the supplier to collect the excise tax

due this State under this Article on the fuel.

(2) To report and pay the tax due on the fuel in the same manner as if the removal

had occurred at a terminal located in this State.

(3) To keep records of the removal of the fuel and submit to audits concerning the

fuel as if the removal had occurred at a terminal located in this State.

(4) To report removals of fuel received by a person who is not licensed in the

state where the removal occurred.

(c) Limited Jurisdiction. – A supplier that makes the election allowed by this section

acknowledges that the State imposes the requirements listed in subsection (b) of this section on

the supplier under its general police power set out in Article 3 of Chapter 119 of the General

Statutes to regulate the quality of motor fuel and thereby promote public health and safety. A


supplier that makes the election allowed by this section submits to the jurisdiction of the State

only for the administration of this Article. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s.

9.)

§ 105-449.72. Bond or letter of credit required as a condition of obtaining and keeping

certain licenses or of applying for certain refunds.

(a) Initial Bond. – An applicant for a license as a refiner, a terminal operator, a supplier,

an importer, a blender, a permissive supplier, or a distributor must file with the Secretary a bond

or an irrevocable letter of credit. A bond or an irrevocable letter of credit must be conditioned

upon compliance with the requirements of this Article, be payable to the State, and be in the

form required by the Secretary. The amount of the bond or irrevocable letter of credit is

determined as follows:

(1) For an applicant for a license as any of the following, the amount is two

million dollars ($2,000,000):

a. A refiner.

b. A terminal operator.

c. A supplier that is a position holder or a person that receives motor fuel

pursuant to a two-party exchange.

d. A bonded importer.

e. A permissive supplier.

(2) For an applicant for a license as any of the following, the amount is two times

the applicant's average expected monthly tax liability under this Article, as

determined by the Secretary. The amount may not be less than two thousand

dollars ($2,000) and may not be more than five hundred thousand dollars

($500,000):

a. Repealed by Session Laws 2007-527, s. 17(a), effective October 1,

2007.

b. An occasional importer.

c. A tank wagon importer.

d. A distributor.

e. Repealed by Session Laws 1997-60, s. 5, effective October 5, 1997.

(3) For an applicant for a license as any of the following, a bond is required only

if the applicant's average expected annual tax liability under this Article, as

determined by the Secretary, is at least two thousand dollars ($2,000). When a

bond is required, the bond amount is the same as under subdivision (2) of this

subsection.

a. A blender.

b. A supplier that is a fuel alcohol provider or a biodiesel provider but is

neither a position holder nor a person that receives motor fuel pursuant

to a two-party exchange.

(b) Multiple Activity. – An applicant for a license as a distributor and as a bonded

importer must file only the bond required of a bonded importer. An applicant for two or more of

the licenses listed in subdivision (a)(2) or (a)(3) of this section may file one bond that covers the

combined liabilities of the applicant under all the activities. A bond for these combined activities

may not exceed the maximum amount set in subdivision (a)(2) of this subsection.


(c) Adjustment to Bond. – When notified to do so by the Secretary, a person that has

filed a bond or an irrevocable letter of credit and that holds a license listed in subdivision (a)(2)

of this section must file an additional bond or irrevocable letter of credit in the amount requested

by the Secretary. The person must file the additional bond or irrevocable letter of credit within

30 days after receiving the notice from the Secretary. The amount of the initial bond or

irrevocable letter of credit and any additional bond or irrevocable letter of credit filed by the

license holder, however, may not exceed the limits set in subdivision (a)(2) of this section.

(d) Replacements. – When a license holder files a bond or an irrevocable letter of credit

as a replacement for a previously filed bond or letter of credit and the license holder has paid all

taxes and penalties due under this Article, the Secretary must take one of the following actions:

(1) Return the previously filed bond or letter of credit.

(2) Notify the person liable on the previously filed bond that the person is

released from liability on the bond.

(e) Credit Card Companies. – The Secretary may require a credit card company to file

with the Secretary a bond if the company applies for a refund under G.S. 105-449.105(a) and the

Secretary determines after an audit that a bond is needed to protect the State from loss in

collecting any additional tax due pursuant to the audit. The bond must be conditioned upon

compliance with the requirements of this Article, be payable to the State, and be in the form

required by the Secretary. The amount of a bond required under this subsection is two times the

average monthly refund due, subject to the minimum and maximum amounts provided in

subdivision (a)(2) of this section.

(f) Exemption. – The requirement to obtain a bond or an irrevocable letter of credit does

not apply to a distributor, an importer, or a motor fuel transporter who supplies motor fuel when

the market for motor fuel is disrupted and emergency supplies are needed, as identified by an

executive order of the Governor. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 10;

1997-60, s. 5; 1998-146, s. 4; 2001-205, s. 5; 2002-108, ss. 7, 8; 2003-349, s. 10.6; 2004-170, s.

28; 2007-527, s. 17(a); 2009-445, s. 33.)

§ 105-449.73. Reasons why the Secretary can deny an application for a license.

The Secretary may refuse to issue a license to an applicant that has done any of the

following:

(1) Had a license or registration issued under this Article or former Article 36 or

36A of this Chapter cancelled by the Secretary for cause.

(1a) Had a motor fuel license or registration issued by another state cancelled for

cause.

(2) Had a federal Certificate of Registry issued under § 4101 of the Code, or a

similar federal authorization, revoked.


(4) Been convicted of any other offense that indicates that the applicant may not

comply with this Article if issued a license.

(5) Failed to remit payment for a tax debt under Chapter 105 or Chapter 119 of

the General Statutes. The term "tax debt" has the same meaning as defined in

G.S. 105-243.1.

(6) Failed to file a return due under Chapter 105 or Chapter 119 of the General

Statutes. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 11; 2003-349,

s. 10.7; 2005-435, s. 11.)


§ 105-449.74. Issuance of license.

Upon approval of an application, the Secretary must issue a license to the applicant. A

supplier's license must indicate the category of the supplier. An importer's license must indicate

the category of the importer. A license holder must maintain and display a copy of the license

issued under this Part in a conspicuous place at each place of business of the license holder. A

license is not transferable and remains in effect until surrendered or cancelled. (1995, c. 390, s.

3; 2004-170, s. 29; 2008-134, s. 30.)

§ 105-449.75. License holder must notify the Secretary of discontinuance of business.

A license holder that stops engaging in this State in the business for which the license was

issued must give the Secretary written notice of the change and must surrender the license to the

Secretary. The notice must give the date the change takes effect and, if the license holder has

transferred the business to another by sale or otherwise, the date of the transfer and the name and

address of the person to whom the business is transferred.

The license holder is responsible for all taxes for which the license holder is liable under this

Article but are not yet due. If the license holder has transferred the business to another and does

not give the notice required by this section, the person to whom the license holder has transferred

the business is liable for the amount of any tax the license holder owed the State on the date the

business was transferred. The liability of the person to whom the business is transferred is

limited to the value of the property acquired from the license holder. (1995, c. 390, s. 3;

2008-134, s. 31.)

§ 105-449.76. Reasons why the Secretary can cancel a license.

The Secretary may cancel a license issued under this Article upon the written request of the

license holder. The Secretary may summarily cancel the license of a license holder when the

Secretary finds that the license holder is incurring liability for the tax imposed under this Article

after failing to pay a tax when due under this Article. In addition, the Secretary may cancel the

license of a license holder that commits one or more of the acts listed in G.S. 105-449.120 after

holding a hearing on whether the license should be cancelled.

The Secretary must send a person whose license is summarily cancelled a notice of the

cancellation and must give the person an opportunity to have a hearing on the cancellation within

10 days after the cancellation. The Secretary must give a person whose license may be cancelled

after a hearing at least 10 days' written notice of the date, time, and place of the hearing. A

notice of a summary license cancellation and a notice of hearing must be sent by registered mail

to the last known address of the license holder.

When the Secretary cancels a license and the license holder has paid all taxes and penalties

due under this Article, the Secretary must take one of the following actions concerning a bond or

an irrevocable letter of credit filed by the license holder:

(1) Return an irrevocable letter of credit to the license holder.

(2) Return a bond to the license holder or notify the person liable on the bond and

the license holder that the person is released from liability on the bond. (1995,

c. 390, s. 3.)

§ 105-449.77. Records and lists of license applicants and license holders.

(a) Records. – The Secretary must keep a record of the following:


(1) Applicants for a license under this Article.

(2) Persons to whom a license has been issued under this Article.

(3) Persons that hold a current license issued under this Article, by license

category.

(b) Lists. – The Secretary must annually give a list to each license holder of all the

license holders under this Article. The list must state the name, account number, and business

address of each license holder on the list. The Secretary must send a monthly update of the list to

each licensed refiner or licensed supplier and to any other license holder that requests a copy of

the list.

(c) Repealed by Session Laws 2002-108, s. 9, effective January 1, 2003. (1995, c. 390, s.

3; 1995 (Reg. Sess., 1996), c. 647, s. 12; 1997-60, s. 6; 2002-108, s. 9.)



Part 3. Tax and Liability.

§ 105-449.80. Tax rate.

(a) Rate. – For the period that begins on January 1, 2016, and ends on June 30, 2016, the

motor fuel excise tax rate is a flat rate of thirty-five cents (35¢) per gallon. For the period that

begins on July 1, 2016, and ends on December 31, 2016, the motor fuel excise tax rate is a flat

rate of thirty-four cents (34¢) per gallon. For the calendar years beginning on January 1, 2017,

the motor fuel excise tax rate is a flat rate of thirty-four cents (34¢) per gallon, multiplied by a

percentage. For calendar years beginning on or after January 1, 2018, the motor fuel excise tax

rate is the amount for the preceding calendar year, multiplied by a percentage. The percentage is

one hundred percent (100%) plus or minus the sum of the following:

(1) The percentage change in population for the applicable calendar year, as

estimated under G.S. 143C-2-2, multiplied by seventy-five percent (75%).

(2) The annual percentage change in the Consumer Price Index for All Urban

Consumers, multiplied by twenty-five percent (25%). For purposes of this

subdivision, "Consumer Price Index for All Urban Consumers" means the

United States city average for energy index contained in the detailed report

released in the October prior to the applicable calendar year by the Bureau of

Labor Statistics of the United States Department of Labor.

(b) Repealed by Session Laws 2015-2, s. 2.2(a), effective January 1, 2016.

(c) Notification. – The Secretary must notify affected taxpayers of the tax rate to be in

effect for each calendar year beginning January 1. (1995, c. 390, s. 3; 2015-2, s. 2.2(a).)

§ 105-449.81. Excise tax on motor fuel.

An excise tax at the motor fuel rate is imposed on motor fuel that is:

(1) Removed from a refinery or a terminal and, upon removal, is subject to the

federal excise tax imposed by § 4081 of the Code.

(2) Imported by a system transfer to a refinery or a terminal and, upon

importation, is subject to the federal excise tax imposed by § 4081 of the

Code.


(3) Imported by a means of transfer outside the terminal transfer system for sale,

use, or storage in this State and would have been subject to the federal excise

tax imposed by § 4081 of the Code if it had been removed at a terminal or

bulk plant rack in this State instead of imported.

(3a) Repealed by Session Laws 2007-527, s. 38(a), effective January 1, 2008.

(3b) Fuel grade ethanol or biodiesel fuel if the fuel meets at least one of the

following descriptions:

a. Is produced in this State and is removed from the storage facility at the

production location.

b. Is imported to this State outside the terminal transfer system.

c. Repealed by Session Laws 2009-445, s. 34(a), effective January 1,

2010.

(4) Blended fuel made in this State or imported to this State.

(5) Transferred within the terminal transfer system and is subject, upon transfer,

to the federal excise tax imposed by section 4081 of the Code or is transferred

to a person who is not licensed under this Article as a supplier. (1995, c. 390,

s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 13; 2004-170, s. 30; 2007-527, s.

38(a); 2008-134, s. 32; 2009-445, s. 34(a); 2014-3, s. 9.7(a).)

§ 105-449.82. Liability for tax on removals from a refinery or terminal.

(a) Refinery Removal. – The excise tax imposed by G.S. 105-449.81(1) on motor fuel

removed from a refinery in this State is payable by the refiner.

(b) Terminal System Removal. – The excise tax imposed by G.S. 105-449.81(1) on

motor fuel removed by a system transfer from a terminal in this State is payable by the position

holder for the fuel. If the position holder is not the terminal operator, the terminal operator is

jointly and severally liable for the tax.

(c) Terminal Rack Removal. – The excise tax imposed by G.S. 105-449.81(1) on motor

fuel removed at a terminal rack in this State is payable by the person that first receives the fuel

upon its removal from the terminal. If the motor fuel is removed by an unlicensed distributor, the

supplier of the fuel is jointly and severally liable for the tax due on the fuel. If the motor fuel is

sold by a person who is not licensed as a supplier, as required by this Article, the terminal

operator, the person selling the fuel, and the person removing the fuel are jointly and severally

liable for the tax due on the fuel. If the motor fuel removed is not dyed diesel fuel but the

shipping document issued for the fuel states that the fuel is dyed diesel fuel, the terminal

operator, the supplier, and the person removing the fuel are jointly and severally liable for the tax

due on the fuel.

If the motor fuel is removed for export by an unlicensed exporter, the exporter is liable for

tax on the fuel at the motor fuel rate and at the rate of the destination state. A supplier who sells

motor fuel to a unlicensed exporter is jointly and severally liable for the tax due on the fuel at the

motor fuel rate. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 14; 1997-60, s. 7;

2008-134, s. 33.)

§ 105-449.83. Liability for tax on imports.

(a) By System Transfer. – The excise tax imposed by G.S. 105-449.81(2) on motor fuel

imported by a system transfer to a refinery is payable by the refiner. The excise tax imposed by

that subdivision on motor fuel imported by a system transfer to a terminal is payable by the


person importing the fuel and by the terminal operator, both of which are jointly and severally

liable for payment of the tax due on the fuel.

(b) From Out-of-State Terminal. – The excise tax imposed by G.S. 105-449.81(3) on

motor fuel that is removed from a terminal rack located in another state and has this State as its

destination state is payable by the importer of the fuel as follows:

(1) If the importer of the fuel is a licensed supplier in this State and the fuel is

removed for the supplier's own account for use in this State, the tax is payable

by the supplier.

(2) If the supplier of the fuel is licensed in this State as an elective supplier or a

permissive supplier, the tax is payable to the supplier as trustee.

(3) If no other subdivision of this subsection applies, the tax is payable by the

importer when filing a return with the Secretary.

(c) From Out-of-State Bulk Plant. – The excise tax imposed by G.S. 105-449.81(3) on

motor fuel that is removed from a bulk plant located in another state is payable by the person that

imports the fuel. (1995, c. 390, s. 3.)

§ 105-449.83A. Liability for tax on fuel grade ethanol and biodiesel.

The excise tax imposed by G.S. 105-449.81(3b) on fuel grade ethanol is payable by the

refiner or fuel alcohol provider. The excise tax imposed by G.S. 105-449.81(3b) on biodiesel is

payable by the refiner or the biodiesel provider. (1995 (Reg. Sess., 1996), c. 647, s. 15;

2008-134, s. 34; 2009-445, s. 34(b); 2014-3, s. 9.7(b).)

§ 105-449.84. Liability for tax on blended fuel.

(a) On Blender. – The excise tax imposed by G.S. 105-449.81(4) on blended fuel made in

this State is payable by the blender. The number of gallons of blended fuel on which the tax is

payable is the difference between the number of gallons of blended fuel made and the number of

gallons of previously taxed motor fuel used to make the blended fuel.

(b) On Importer. – The excise tax imposed by G.S. 105-449.81(4) on blended fuel

imported to this State is payable by the importer.

(c) Blends Made at Terminal. – The following blended fuel is considered to have been

made by the supplier of gasoline or undyed diesel fuel used in the blend:

(1) An in-line-blend made by combining a liquid with gasoline or undyed diesel

fuel as the fuel is delivered at a terminal rack into the motor fuel storage

compartment of a transport truck or a tank wagon.

(2) A kerosene splash-blend made when kerosene is delivered at a terminal into a

motor fuel storage compartment of a transport truck or a tank wagon and

undyed diesel fuel is also delivered at that terminal into the same storage

compartment, if the buyer of the kerosene notified the supplier before or at the

time of delivery that the kerosene would be used to make a splash-blend.

(1995, c. 390, s. 3.)

§ 105-449.84A. Liability for tax on behind-the-rack transfers.

The excise tax imposed by G.S. 105-449.81(5) on motor fuel that is transferred within the

terminal transfer system and is subject to the federal excise tax is payable by the supplier of the

fuel, the person receiving the fuel, and the terminal operator of the terminal at which the fuel was

transferred, all of whom are jointly and severally liable for the tax. The excise tax imposed by


that subdivision on motor fuel that is transferred within the terminal transfer system by a person

that is not licensed under this Article as a supplier is payable by the person transferring the motor

fuel, the person receiving the motor fuel, and the terminal operation of the terminal at which the

fuel was transferred, all of whom are jointly and severally liable for the tax. (1995 (Reg. Sess.,

1996), c. 647, s. 17; 2008-134, s. 35.)

§ 105-449.85. Compensating tax on and liability for unaccounted for motor fuel losses at a

terminal.

(a) Tax. – An excise tax at the motor fuel rate is imposed annually on unaccounted for

motor fuel losses at a terminal that exceed one-half of one percent (0.5%) of the number of net

gallons removed from the terminal during the year by a system transfer or at a terminal rack. To

determine if this tax applies, the terminal operator of the terminal must determine the difference

between the following:

(1) The amount of motor fuel in inventory at the terminal at the beginning of the

year plus the amount of motor fuel received by the terminal during the year.

(2) The amount of motor fuel in inventory at the terminal at the end of the year

plus the amount of motor fuel removed from the terminal during the year.

(b) Liability. – The terminal operator whose motor fuel is unaccounted for is liable for

the tax imposed by this section and is liable for a penalty equal to the amount of tax payable.

Motor fuel received by a terminal operator and not shown on an informational return filed by the

terminal operator with the Secretary as having been removed from the terminal is presumed to be

unaccounted for motor fuel. A terminal operator may establish that it can account for motor fuel

received at a terminal but not shown on an informational return as having been removed from the

terminal if the motor fuel was lost or part of a transmix. (1995, c. 390, s. 3; 1995 (Reg. Sess.,

1996), c. 647, s. 18; 2008-134, s. 36.)

§ 105-449.86. Tax on and liability for dyed diesel fuel used to operate certain highway

vehicles.

(a) Tax. – An excise tax at the motor fuel rate is imposed on dyed diesel fuel acquired to

operate any of the following:


(2) A local bus that is allowed by § 4082(b)(3) of the Code to use dyed diesel

fuel.

(3) A highway vehicle that is owned by or leased to an educational organization

that is not a public school and is allowed by § 4082(b)(1) or (b)(3) of the Code

to use dyed diesel fuel.


(b) Liability. – If the distributor of dyed diesel fuel that is taxable under this section is not

liable for the tax imposed by this section, the person that acquires the fuel is liable for the tax.

The distributor of dyed diesel fuel that is taxable under this section is liable for the tax imposed

by this section in the following circumstances:

(1) When the person acquiring the dyed diesel fuel has storage facilities for the

fuel and is therefore a bulk end-user of the fuel.

(2) When the person acquired the dyed diesel fuel from a retail outlet of the

distributor by using an access card or code indicating that the person's use of


the fuel is taxable under this section. (1995, c. 390, s. 3; 2003-349, s. 10.8;

2005-435, s. 12; 2008-134, s. 37.)

§ 105-449.87. Backup tax and liability for the tax.

(a) Tax. – An excise tax at the motor fuel rate is imposed on the following:

(1) Dyed diesel fuel that is used to operate a highway vehicle for a use that is not

a nontaxable use under § 4082(b) of the Code.

(2) Motor fuel that was allowed an exemption from the motor fuel tax and was

then used for a taxable purpose.

(3) Motor fuel that is used to operate a highway vehicle after an application for a

refund of tax paid on the motor fuel is made or allowed under G.S.

105-449.107(a) on the basis that the motor fuel was used for an off-highway

purpose.

(4) Repealed by Session Laws 1995 (Regular Session, 1996), c. 647, s. 19.

(5) Motor fuel that, based on its shipping document, is destined for delivery to

another state and is then diverted and delivered in this State.

(b) General Liability. – The operator of a highway vehicle that uses motor fuel that is

taxable under subdivisions (a)(1) through (a)(3) of this section is liable for the tax. If the

highway vehicle that uses the fuel is owned by or leased to a motor carrier, the motor carrier is

jointly and severally liable for the tax. If the end-seller of motor fuel taxable under this section

knew or had reason to know that the motor fuel would be used for a purpose that is taxable under

this section, the end-seller is jointly and severally liable for the tax. If the Secretary determines

that a bulk end-user or retailer used or sold untaxed dyed diesel fuel to operate a highway vehicle

when the fuel is dispensed from a storage facility or through a meter marked for nonhighway

use, all fuel delivered into that storage facility is presumed to have been used to operate a

highway vehicle. An end-seller of dyed diesel fuel is considered to have known or had reason to

know that the fuel would be used for a purpose that is taxable under this section if the end-seller

delivered the fuel into a storage facility that was not marked as required by G.S. 105-449.123.

(c) Diverted Fuel. – The person who authorizes a change in the destination state of motor

fuel from the state given on the fuel's shipping document to North Carolina is liable for the tax

due on the motor fuel. If motor fuel is diverted from North Carolina to another state, only the

person who authorized the fuel to be diverted is eligible for a refund of the amount of tax paid on

the fuel. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 19; 1997-60, s. 8; 1998-146, s. 5;

1999-438, s. 22; 2002-108, s. 10; 2008-134, s. 38.)

§ 105-449.88. Exemptions from the excise tax.

The excise tax on motor fuel does not apply to the following:

(1) Motor fuel removed, by transport truck or another means of transfer outside

the terminal transfer system, from a terminal for export, if the motor fuel is

removed by a licensed distributor or a licensed exporter and the supplier of the

motor fuel collects tax on it at the rate of the motor fuel's destination state.

(1a) Motor fuel removed by transport truck from a terminal for export if the motor

fuel is removed by a licensed distributor or licensed exporter, the supplier that

is the position holder for the motor fuel sells the motor fuel to another supplier

as the motor fuel crosses the terminal rack, the purchasing supplier or its

customer receives the motor fuel at the terminal rack for export, and the


supplier that is the position holder collects tax on the motor fuel at the rate of

the motor fuel's destination state.

(2) Motor fuel sold to the federal government for its use.

(3) Motor fuel sold to the State for its use.

(4) Motor fuel sold to a local board of education for use in the public school

system.

(5) Diesel that is kerosene and is sold to an airport.

(6) Motor fuel sold to a charter school for use for charter school purposes.

(7) Motor fuel sold to a community college for use for community college

purposes.

(8) Motor fuel sold to a county or a municipal corporation for its use.

(9) Biodiesel that is produced by an individual for use in a private passenger

vehicle registered in that individual's name pursuant to Chapter 20 of the

General Statutes. For the purposes of this subdivision, the term "private

passenger vehicle" has the same meaning as in G.S. 20-4.01. (1995, c. 390, s.

3; 1995 (Reg. Sess., 1996), c. 647, ss. 20, 21; 1998-98, s. 28; 1998-146, s. 6;

2000-72, s. 2; 2000-173, ss. 13(b), 15; 2001-427, s. 9(a); 2002-108, s. 11;

2007-524, s. 1.)

§ 105-449.88A. Liability for tax due on motor fuel designated as exempt by the use of cards

or codes.

(a) Repealed by Session Laws 2006-162, s. 14(b), effective January 1, 2007, and

applicable to motor fuel purchased on or after that date.

(b) Exempt Card or Code. – An entity that issues an exempt card or code has a duty to

determine if the person to whom it is issued is exempt from the motor fuel excise tax. An entity

that issues an exempt card or code to a person who is not exempt from tax is liable for tax due on

motor fuel the person purchases at retail by use of the exempt card or code. If a supplier

authorizes another entity to issue an exempt card or code to a person who is not exempt from tax,

the supplier and the entity that issued the card are jointly and severally liable for tax due on

motor fuel the person purchases at retail by use of the exempt card or code.

(c) Card Holder. – A person to whom an exempt card or code is issued is liable for any

tax due on fuel purchased with the card or code for a purpose that is not exempt. A person who

misuses an exempt card or code by purchasing fuel with the card or code for a purpose that is not

exempt is liable for the tax due on the fuel. (1997-60, s. 9; 2001-205, s. 4; 2006-162, s. 14(b).)

§ 105-449.89. Restrictions on removal of motor fuel from terminal.

(a) By Bulk End-User. – An out-of-state bulk end-user may not remove motor fuel from

a terminal in this State for use in the state in which the bulk end-user is located unless the bulk

end-user is licensed under this Article as an exporter. An out-of-state bulk end-user that is not

licensed under this Article may remove motor fuel from a bulk plant in this State.

(b) To Marine Vessel. – A supplier may not transfer motor fuel from a terminal to a

marine vessel unless the person to whom the supplier transfers the motor fuel is licensed as a

supplier. (1995 (Reg. Sess., 1996), c. 647, s. 22; 1997-60, s. 10; 2008-134, s. 39.)

Part 4. Payment and Reporting.

§ 105-449.90. When tax return and payment are due.


(a) Filing Periods. – The excise tax imposed by this Article is payable when a return is

due. A return is due annually or monthly, as specified in this section. A return must be filed with

the Secretary and be in the form required by the Secretary.

An annual return is due within 45 days after the end of each calendar year. An annual return

covers tax liabilities that accrue in the calendar year preceding the date the return is due.

A monthly return of a person other than an occasional importer is due within 22 days after

the end of each month. A monthly return of an occasional importer is due by the 3rd of each

month. A monthly return covers tax liabilities that accrue in the calendar month preceding the

date the return is due.

(b) Annual Filers. – A terminal operator must file an annual return for the compensating

tax imposed by G.S. 105-449.85.

(c) Repealed by Session Laws 2006-162, s. 14(c), effective January 1, 2007, and


(d) Monthly Filers on 22nd. – The following persons must file a monthly return by the

22nd of each month:

(1) A refiner.

(2) A supplier.

(3) A bonded importer.

(4) A blender.

(5) A tank wagon importer.

(6) A person that incurred a liability under G.S. 105-449.86 during the preceding

month for the tax on dyed diesel fuel used to operate certain highway vehicles.

(7) A person that incurred a liability under G.S. 105-449.87 during the preceding

month for the backup tax on motor fuel.

(e) Monthly Filers on 3rd. – An occasional importer must file a monthly return by the

third day of each month. An occasional importer is not required to file a return, however, if all

the motor fuel imported by the importer in a reporting period was removed at a terminal located

in another state and the supplier of the fuel is an elective supplier or a permissive supplier. (1995,

c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 23; 1997-60, s. 11; 2006-162, s. 14(c).)

§ 105-449.90A. Payment by supplier of destination state tax collected on exported motor

fuel.

Tax collected by a supplier on exported motor fuel is payable by the supplier to the

destination state. Payments of destination state tax are due to the destination state on the date set

by the law of the destination state. (1995 (Reg. Sess., 1996), c. 647, s. 24; 2005-435, s. 13.)

§ 105-449.91. Remittance of tax to supplier.

(a) Distributor. – A distributor must remit tax due on motor fuel removed at a terminal

rack to the supplier of the fuel. A licensed distributor has the right to defer the remittance of tax

to the supplier, as trustee, until the date the trustee must pay the tax to this State or to another

state. The time when an unlicensed distributor must remit tax to a supplier is governed by the

terms of the contract between the supplier and the unlicensed distributor.

(b) Exporter. – A licensed exporter must remit tax due on motor fuel removed at a

terminal rack to the supplier of the fuel. The time when a licensed exporter must remit tax to a

supplier is governed by the law of the destination state of the exported motor fuel.


(c) Importer. – A licensed importer must remit tax due on motor fuel removed at a

terminal rack of a permissive or an elective supplier to the supplier of the fuel. A licensed

importer that removes fuel from a terminal rack of a permissive or an elective supplier has the

right to defer the remittance of tax to the supplier until the date the supplier must pay the tax to

this State.

(d) General. – A person who removes motor fuel at a terminal rack and is not subject to

another subsection in this section must remit tax due on the motor fuel to the supplier of the fuel.

The time the person must remit tax to a supplier is governed by the terms of the contract between

the supplier and the person.

The method by which a person must remit tax to a supplier under this section is governed by

the terms of the contract between the supplier and that person. G.S. 105-449.76 governs the

cancellation of a license of a distributor, an exporter, and an importer. (1995, c. 390, s. 3; 1995

(Reg. Sess., 1996), c. 647, s. 25; 1997-60, s. 12; 2008-134, s. 40.)

§ 105-449.92. Notice to suppliers of cancellation or reissuance of certain licenses; effect of

notice.

(a) Notice to Suppliers. – If the Secretary cancels a distributor's license, an exporter's

license, or an importer's license, the Secretary must notify all suppliers of the cancellation. If the

Secretary issues a license to a distributor, an exporter, or an importer whose license was

cancelled, the Secretary must notify all suppliers of the issuance.

(b) Effect of Notice. – A supplier that sells motor fuel to a distributor after receiving

notice from the Secretary that the Secretary has cancelled the distributor's license is jointly and

severally liable with the distributor for any tax due on motor fuel the supplier sells to the

distributor after receiving the notice. This joint and several liability does not apply to excise tax

due on motor fuel sold to a previously unlicensed distributor after the supplier receives notice

from the Secretary that the Secretary has issued another license to the distributor. (1995, c. 390,

s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 26; 1997-60, s. 13.)

§ 105-449.93. Percentage discount for licensed distributors and some licensed importers.

(a) Repealed by Session Laws 2006-162, s. 14(d), effective January 1, 2007, and


(b) Percentage Discount. – A licensed distributor that pays the tax due a supplier by the

date the supplier must pay the tax to the State may deduct from the amount due a discount of one

percent (1%) of the amount of tax payable. A licensed importer that removes motor fuel from a

terminal rack of a permissive or an elective supplier and that pays the tax due the supplier by the

date the supplier must pay the tax to the State may deduct from the amount due a discount of the

same amount allowed a licensed distributor. The discount covers the expense of furnishing a

bond and losses due to shrinkage or evaporation. A supplier may not directly or indirectly deny

this discount to a licensed distributor or licensed importer that pays the tax due the supplier by

the date the supplier must pay the tax to the State. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c.

647, s. 27; 2006-162, s. 14(d).)

§ 105-449.94: Repealed by Session Laws 2006-162, s. 14(e), effective January 1, 2007, and

applicable to motor fuels purchased on or after that date.


§ 105-449.95: Recodified as G.S. 105-449.105B by Session Laws 2009-445, s. 35(a), effective

January 1, 2010.

§ 105-449.96. Information required on return filed by supplier.

A return of a supplier must list all of the following information and any other information

required by the Secretary:

(1) The number of gallons of tax-paid motor fuel received by the supplier during

the month, sorted by type of fuel.

(2) The number of gallons of motor fuel removed at a terminal rack during the

month from the account of the supplier, sorted by type of fuel.

(3) The number of gallons of motor fuel removed during the month for export,

sorted by type of fuel.

(4) The number of gallons of motor fuel removed during the month at a terminal

located in another state for destination to this State, as indicated on the

shipping document for the fuel, sorted by type of fuel.

(5) The number of gallons of motor fuel the supplier sold during the month to a

governmental unit whose use of fuel is exempt from tax, sorted by type of

fuel.

(6) The amount of discounts allowed under G.S. 105-449.93(b) on motor fuel sold

during the month to licensed distributors or licensed importers.

(7) The number of gallons of motor fuel the supplier exchanged during the month

with another licensed supplier pursuant to a two-party exchange agreement,

sorted by type of fuel. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s.

30; 1997-60, s. 14; 2005-435, s. 14; 2008-134, s. 41.)

§ 105-449.97. Deductions and discounts allowed a supplier when filing a return.

(a) Taxes Not Remitted. – When a supplier files a return, the supplier may deduct from

the amount of tax payable with the return the amount of tax any of the following license holders

owes the supplier but failed to remit to the supplier:

(1) A licensed distributor.

(2) A licensed importer that removed the motor fuel on which the tax is due from

a terminal of an elective or a permissive supplier.


A supplier is not liable for tax a license holder listed in this subsection owes the supplier but

fails to pay. If a listed license holder pays tax owed to a supplier after the supplier deducts the

amount on a return, the supplier must promptly remit the payment to the Secretary.

(b) Administrative Discount. – A supplier that files a timely return and sends a timely

payment may deduct from the amount of tax payable with the return an administrative discount

of one-tenth of one percent (0.1%) of the amount of tax payable to this State as the trustee, not to

exceed eight thousand dollars ($8,000) a month. The discount covers expenses incurred in

collecting taxes on motor fuel.

(c) Percentage Discount. – A supplier that sells motor fuel directly to an unlicensed

distributor or to the bulk end-user, the retailer, or the user of the fuel may take the same

percentage discount on the fuel that a licensed distributor may take under G.S. 105-449.93(b)

when making deferred payments of tax to the supplier.


(d) Taxes Paid on Exempt Retail Sales. – When filing a return, a supplier that issues or

authorizes the issuance of an exempt card or code to a person that enables the person to buy

motor fuel without paying tax on the fuel may deduct the amount of excise tax imposed on fuel

purchased with the exempt card or code. The amount of excise tax imposed on fuel purchased

with an exempt card or code is the amount that was imposed on the fuel when it was delivered to

the retailer of the fuel. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, ss. 31, 32; 1997-60, s.

15; 1999-438, s. 23; 2000-173, s. 14(c); 2006-162, s. 14(f); 2008-134, s. 42.)

§ 105-449.98. Duties of supplier concerning payments by distributors, exporters, and

importers.

(a) As Fiduciary. – A supplier has a fiduciary duty to remit to the Secretary the amount

of tax paid to the supplier by a licensed distributor, licensed exporter, or licensed importer. A

supplier is liable for taxes paid to the supplier by a licensed distributor, licensed exporter, or

licensed importer.

(b) Notice of Fuel Received. – A supplier must notify a licensed distributor, a licensed

exporter, or a licensed importer that received motor fuel from the supplier during a reporting

period of the number of taxable gallons received. The supplier must give this notice after the end

of each reporting period and before the license holder must remit to the supplier the amount of

tax due on the fuel.

(c) Notice to Department. – A supplier of motor fuel at a terminal must notify the

Department within 10 business days after a return is due of any licensed distributors, licensed

exporters, or licensed importers that did not pay the tax due the supplier when the supplier filed

the return. The notice must be transmitted to the Department in the form required by the

Department.

(d) Payment Application. – A supplier that receives a payment of tax from a licensed

distributor, a licensed exporter, or a licensed importer may not apply the payment to a debt that

person owes the supplier for motor fuel purchased from the supplier. (1995, c. 390, s. 3; 1995

(Reg. Sess., 1996), c. 647, s. 33; 1997-60, s. 16.)

§ 105-449.99. Returns and discounts of importers.

(a) Return. – A monthly return of a bonded importer, an occasional importer, or a tank

wagon importer must contain the following information concerning motor fuel imported during

the period covered by the return:

(1) The number of gallons of imported motor fuel acquired from a supplier that

collected the excise tax due this State on the fuel.

(2) The number of gallons of imported motor fuel acquired from a supplier that

did not collect the excise tax due this State on the fuel, listed by source state,

supplier, and terminal.

(3) The import authorization number of each import that is reported under

subdivision (2) of this subsection and was removed from a terminal.

(4) For an occasional importer or a tank wagon importer, the number of gallons of

imported motor fuel acquired from a bulk plant, listed by bulk plant.

(b) Discounts. – An importer may not deduct an administrative discount from the amount

remitted with a return. An importer that imports motor fuel received from an elective supplier or

a permissive supplier may deduct the percentage discount allowed by G.S. 105-449.93(b) when

remitting tax to the supplier, as trustee, for payment to the State. An importer that imports motor


fuel received from a supplier that is not an elective supplier or a permissive supplier may not

deduct the percentage discount allowed by G.S. 105-449.93(b) when filing a return for the tax

due. (1995, c. 390, s. 3.)

§ 105-449.100. Terminal operator to file informational return showing changes in amount

of motor fuel at the terminal.

(a) Requirement. – A terminal operator must file a monthly informational return with the

Secretary that shows the amount of motor fuel received or removed from the terminal during the

month. A terminal operator must report all motor fuel removed from an out-of-state terminal that

has this State as its destination state.

(b) Content. – The return is due on the date a monthly return is due under G.S.

105-449.90. The return must contain the following information and any other information

required by the Secretary:

(1) The number of gallons of motor fuel received in inventory at the terminal

during the month and each position holder for the fuel, sorted by type of fuel.

(2) The number of gallons of motor fuel removed from inventory at the terminal

during the month and, for each removal, the position holder for the fuel and

the destination state of the fuel, sorted by type of fuel.

(3) The number of gallons of motor fuel gained or lost at the terminal during the

month.

(4) The number of gallons of motor fuel in inventory at the beginning of each

month and at the end of each month.

(c) Due Date. – The return is due on the date a monthly return is due under G.S.

105-449.90. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 34; 2006-162, s. 15(a);

2008-134, s. 43.)

§ 105-449.101. Motor fuel transporter to file informational return showing deliveries of

motor fuel.

(a) Requirement. – A motor fuel transporter that is required to be licensed under this

Article must file a monthly informational return with the Secretary that shows motor fuel

transported in this State by the transporter during the month.

(b) Content. – The return required by this section must contain the following information

and any other information required by the Secretary:

(1) The name and address of each person from whom the transporter received

motor fuel outside the State for delivery in the State, the amount of motor fuel

received, the date the motor fuel was received, and the destination state of the

fuel.


motor fuel in the State for delivery outside the State, the amount of motor fuel

delivered, the date the motor fuel was delivered, and the destination state of

the fuel.


motor fuel in the State for delivery in the State, the amount of motor fuel

received, the date the motor fuel was received, and the destination state of the

fuel.


(c) Due Date. – The return required by this section is due on the date a monthly return is

due under G.S. 105-449.90. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 35; 2002-108,

s. 12; 2006-162, ss. 13(b), 15(b); 2008-134, s. 44.)

§ 105-449.102. Distributor to file return showing exports from a bulk plant.

(a) Requirement. – A distributor that exports motor fuel from a bulk plant located in this

State must file a monthly return with the Secretary that shows the exports. The return serves as a

claim for refund by the distributor for tax paid to this State on the exported motor fuel.

(b) Content. – The return must contain the following information and any other


(1) The number of gallons of motor fuel exported during the month.

(2) The destination state of the motor fuel exported during the month.

(3) A certification that the distributor has paid to the destination state of the motor

fuel exported during the month, or will pay on a timely basis, the amount of

tax due that state on the fuel.

(c) Due Date. – The return is due on the date a monthly return is due under G.S.

105-449.90. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 36; 2006-162, s. 15(c);

2008-134, s. 45.)


§ 105-449.104. Use of name and account number on return.

When a transaction with a person licensed under this Article is required to be reported on a

return, the return must state the license holder's name and the account number used by the

Department to identify the license holder. The name of a license holder and the license holder's

account number is stated on the lists compiled under G.S. 105-449.77. (1995 (Reg. Sess., 1996),

c. 647, s. 37.)

Part 5. Refunds.

§ 105-449.105. Monthly refunds for tax paid on exempt fuel, lost fuel, and accidental mixes

that result in fuel unsuitable for highway use.

(a) Exempt Fuel. – An entity whose use of motor fuel is exempt from tax may obtain a

monthly refund of any motor fuel excise tax the entity pays on its motor fuel. A person who sells

motor fuel to an entity whose use of motor fuel is exempt from tax may obtain a monthly refund

of any motor fuel excise tax the person pays on motor fuel it sells to the entity. A credit card

company that issues a credit card to an entity whose use of motor fuel is exempt from tax may

obtain a monthly refund of any motor fuel excise tax the company pays on motor fuel the entity

purchases using the credit card.

A person may obtain a monthly refund of tax paid by the person on exported fuel, including

fuel whose shipping document shows this State as the destination state but was diverted to

another state in accordance with the diversion procedures established by the Secretary. An

out-of-state bulk end-user is not allowed a refund on fuel exported from a bulk plant unless the

bulk end-user is licensed as an exporter.

(b) Lost Fuel. – A supplier, an importer, or a distributor that loses tax-paid motor fuel due

to damage to a conveyance transporting the motor fuel, fire, a natural disaster, an act of war, or

an accident may obtain a monthly refund for the tax paid on the fuel.


(c) Accidental Mixes. – A person that accidentally combines any of the following may

obtain a monthly refund for the amount of tax paid on the fuel:

(1) Dyed diesel fuel with tax-paid motor fuel.

(2) Gasoline with diesel fuel.

(3) Undyed diesel fuel with dyed kerosene.

(d) Repealed by Session Laws 1998-98, s. 29.

(e) Refund Amount. – The amount of a refund allowed under this section is the amount

of excise tax paid, less the amount of any discount allowed on the fuel under G.S. 105-449.93.

(1995, c. 390, s. 3; c. 523, ss. 32.1, 32.2; 1995 (Reg. Sess., 1996), c. 647, s. 38; 1997-6, s. 12;

1997-60, s. 17; 1998-98, s. 29; 2000-173, s. 16; 2001-205, s. 3; 2008-134, s. 46.)

§ 105-449.105A. Monthly refunds for kerosene.

(a) Refund for Undyed Kerosene Sold to an End User for Non-Highway Use. – A

distributor who sells kerosene to an end user for one of the purposes listed in this subsection may

obtain a monthly refund for the excise tax the distributor paid on the kerosene, less the amount of

any discount allowed on the kerosene under G.S. 105-449.93, if the distributor dispenses the

kerosene into a storage facility of the end user that contains fuel used only for one of those

purposes and the storage facility is installed in a manner that makes use of the fuel for any other

purpose improbable.

(1) Heating.

(2) Drying crops.

(3) A manufacturing process.

(b) Liability. – If the Secretary determines that the Department overpaid a distributor by

refunding more tax to the distributor than is due under this section, the distributor is liable for the

amount of the overpayment. (1998-146, s. 8; 2000-173, s. 17; 2001-205, s. 6; 2006-162, s.

14(g); 2008-134, ss. 47, 48; 2010-95, s. 29(a).)

§ 105-449.105B. Monthly hold harmless refunds for licensed distributors and some

licensed importers.

If a licensed distributor or licensed importer purchases motor fuel from a licensed supplier

during a month and the discount the distributor or importer receives under G.S. 105-449.93(b) on

the motor fuel is less than the amount the distributor or importer would have received during that

month if the distributor or importer had been allowed a discount on taxable gasoline purchased

by the distributor or importer from a supplier under the following schedule, the distributor or

importer is allowed a monthly refund of the difference:

Amount of Gasoline Purchased Percentage

Each Month Discount

First 150,000 gallons 2%

Next 100,000 gallons 1 1/2%

Amount over 250,000 gallons 1%.

In determining the amount of discounts a distributor or importer received under G.S.

105-449.93(b) for motor fuel purchased in a month, a distributor or importer is considered to

have received the amount of any discounts the distributor or importer could have received under

that subsection but did not receive because the distributor or importer failed to pay the tax due to

the supplier by the date the supplier had to pay the tax to the State. (1995, c. 390, s. 3; 1995

(Reg. Sess., 1996), c. 647, s. 29; 1997-6, s. 11; 2009-445, s. 35(a); 2010-95, s. 30.)


§ 105-449.106. Quarterly refunds for nonprofit organizations, taxicabs, and special mobile

equipment.

(a) Nonprofits. – A nonprofit organization listed below that purchases and uses motor

fuel may receive a quarterly refund, for the excise tax paid during the preceding quarter, at a rate

equal to the amount of the flat cents-per-gallon rate plus the variable cents-per-gallon rate in

effect during the quarter for which the refund is claimed, less one cent (1¢) per gallon.

An application for a refund allowed under this subsection must be made in accordance with

this Part and must be signed by the chief executive officer of the organization. The chief

executive officer of a nonprofit organization is the president of the organization or another

officer of the organization designated in the charter or bylaws of the organization.

Any of the following entities may receive a refund under this subsection:

(1) Repealed by Session Laws 2002-108, s. 13, effective January 1, 2003.

(2) A private, nonprofit organization that transports passengers under contract

with or at the express designation of a unit of local government.

(3) A volunteer fire department.

(4) A volunteer rescue squad.

(5) A sheltered workshop recognized by the Department of Health and Human

Services.

(b) (Repealed effective for taxable years beginning on or after January 1, 2015) Taxi.

– A person who purchases and uses motor fuel in a taxicab while the taxicab is engaged in

transporting passengers for hire, or in a bus operated as part of a city transit system that is

exempt from regulation by the North Carolina Utilities Commission under G.S. 62-260(a)(8),

may receive a quarterly refund, for the excise tax paid during the preceding quarter, at a rate

equal to the flat cents-per-gallon rate plus the variable cents-per-gallon rate in effect during the

quarter for which the refund is claimed, less one cent (1¢) per gallon. For purposes of this

subsection, the term "taxicab" means a motor vehicle that seats no more than nine passengers,

transports passengers for hire, operates on call or demand, and accepts and solicits passengers

indiscriminately. An application for a refund must be made in accordance with this Part.

(c) Special Mobile Equipment. – A person who purchases and uses motor fuel for the

off-highway operation of special mobile equipment registered under Chapter 20 of the General

Statutes may receive a quarterly refund, for the excise tax paid during the preceding quarter, at a

rate equal to the flat cents-per-gallon rate plus the variable cents-per-gallon rate in effect during

the quarter for which the refund is claimed, less the amount of sales and use tax due on the fuel

under this Chapter, as determined in accordance with G.S. 105-449.107(c). An application for a

refund must be made in accordance with this Part. (1995, c. 390, s. 3; 1997-6, s. 13; 1997-443, s.

11A.118(a); 1999-438, s. 24; 2002-108, s. 13; 2005-435, s. 15; 2006-162, s. 16(a); 2010-95, ss.

31(a), (b); 2014-3, s. 9.10(a); 2014-100, s. 34.6(a).)

§ 105-449.107. Annual refunds for off-highway use and use by certain vehicles with power

attachments.

(a) Off-Highway. – A person who purchases and uses motor fuel for a purpose other than

to operate a licensed highway vehicle may receive an annual refund for the excise tax the person

paid on fuel used during the preceding calendar year. The amount of refund allowed is the

amount of the flat cents-per-gallon rate in effect during the year for which the refund is claimed

plus the average of the two variable cents-per-gallon rates in effect during that year, less the


amount of sales and use tax due on the fuel under this Chapter. An application for a refund

allowed under this section must be made in accordance with this Part.

(b) Certain Vehicles. – A person who purchases and uses motor fuel in one of the

vehicles listed below may receive an annual refund for the amount of fuel consumed by the

vehicle:

(1) A concrete mixing vehicle.

(2) A solid waste compacting vehicle.

(3) A bulk feed vehicle that delivers feed to poultry or livestock and uses a power

takeoff to unload the feed.

(4) A vehicle that delivers lime or fertilizer in bulk to farms and uses a power

takeoff to unload the lime or fertilizer.

(5) A tank wagon that delivers alternative fuel, as defined in G.S. 105-449.130, or

motor fuel or another type of liquid fuel into storage tanks and uses a power

takeoff to make the delivery.

(6) A commercial vehicle that delivers and spreads mulch, soils, composts, sand,

sawdust, and similar materials and that uses a power takeoff to unload, blow,

and spread the materials.

(7) A commercial vehicle that uses a power takeoff to remove and dispose of

septage and for which an annual fee is required to be paid to the Department

of Environmental Quality under G.S. 130A-291.1.

(8) A sweeper.

The amount of refund allowed is thirty-three and one-third percent (33 1/3%) of the

following: the sum of the flat cents-per-gallon rate in effect during the year for which the refund

is claimed and the average of the two variable cents-per-gallon rates in effect during that year,

less the amount of sales and use tax due on the fuel under this Chapter. An application for a

refund allowed under this section must be made in accordance with this Part. This refund is

allowed for the amount of fuel consumed by the vehicle in its mixing, compacting, or unloading

operations, as distinguished from propelling the vehicle, which amount is considered to be

one-third of the amount of fuel consumed by the vehicle.

(c) Sales Tax Amount. – Article 5 of Subchapter I of this Chapter determines the amount

of State sales and use tax to be deducted under this section from a motor fuel excise tax refund.

Articles 39, 40, and 42 of Subchapter VIII of this Chapter and the Mecklenburg First 1% Sales

Tax Act determine the amount of local sales and use tax to be deducted under this section from a

motor fuel excise tax refund. (1995, c. 390, s. 3; 1997-6, s. 14; 1997-423, s. 4; 2001-408, s. 1;

2005-377, s. 1; 2006-162, s. 16(b); 2014-3, s. 9.10(b); 2015-2, ss. 2.2(b), 2.3; 2015-6, s. 2.25;

2015-241, s. 14.30(u).)

§ 105-449.108. When an application for a refund is due.

(a) Due Dates. – The due dates of applications for refunds are as follows:

Refund Period Due Date

Annual April 15 after the end of the year

Quarterly Last day of the month after the end of the quarter

Monthly 22nd day after the end of the month

(b) Requirements. – An application for a refund allowed under this Part must be filed

with the Secretary and be in the form required by the Secretary. The application must state that

the applicant has paid for the fuel for which a refund is claimed or that payment for the fuel has


been secured to the seller's satisfaction. An application for an annual refund must state whether

or not the applicant has filed a North Carolina income tax return for the preceding taxable year.

(c) Repealed by Session Laws 1998-146, s. 10, effective September 18, 1998.

(d) Late Application. – A refund applied for more than three years after the date the

application is due is barred. (1995, c. 390, s. 3; 1997-6, s. 15; 1998-146, s. 10; 1998-212, s.

29A.14(r); 2008-134, s. 49; 2010-95, s. 32.)

§ 105-449.109: Repealed by Session Laws 1998-212, s. 29A.14(s).

§ 105-449.110. Review of refund application and payment of refund.

(a) Decision. – Upon determining that an application for refund is correct, the Secretary

must issue the applicant a warrant upon the State Treasurer for the amount of the refund. If the

Secretary determines that an application for refund is incorrect, the Secretary must send a written

notice of the determination to the applicant. The notice must advise the applicant that the

applicant may request a hearing on the matter in accordance with Article 9 of this Chapter.

(b) Interest. – The rate of interest payable on a refund is the rate set in G.S. 105-241.21.

Interest accrues on a refund from the date that is 90 days after the later of the following:

(1) The date the application for refund was filed.

(2) The date the application for refund was due. (1995, c. 390, s. 3; 1998-98, s.

30; 2007-491, s. 44(1)a.)




§ 105-449.114. Authority for agreement with Eastern Band of Cherokee Indians.

(a) By virtue of an Act of June 4, 1924, Pub. L. No. 68-191, Ch. 253, 43 Stat. 370,

Congress and the United States courts have recognized the Eastern Band of Cherokee Indians as

possessing sovereign legal rights over their members and their trust lands.

(b) The following definitions apply in this act:

(1) Chief. – The Principal Chief of the Eastern Band of the Cherokee Indians.

(2) Council. – The Tribal Council of the Eastern Band of the Cherokee Indians.

(3) Tribe. – The Eastern Band of the Cherokee Indians.

(c) Notwithstanding any other provision of law concerning refunds of motor fuels and

alternative fuels taxes, the Department of Revenue may enter into a memorandum of

understanding or an agreement with the Eastern Band of Cherokee Indians to make refunds of

motor fuels and alternative fuels taxes to the Tribe in its collective capacity on behalf of its

members who reside on or engage in otherwise taxable transactions within Cherokee trust lands.

The memorandum or agreement shall be approved by the Council and signed by the Chief on

behalf of the Tribe and shall be signed by the Secretary of Revenue on behalf of Department of

Revenue. The memorandum or agreement may not affect the right of an individual member of

the Tribe to a refund and shall provide for deduction of amounts refunded to individual members

of the Tribe from the amounts to be refunded to the Tribe on behalf of all members. The


memorandum or agreement may be effective for a definite or indefinite period, as specified in

the agreement. (1989, c. 753, ss. 1-3; 1991, c. 193, s. 6; 2002-108, s. 14.)

Part 6. Enforcement and Administration.

§ 105-449.115. Shipping document required to transport motor fuel by railroad tank car

or transport truck.

(a) Issuance. – A person may not transport motor fuel by railroad tank car or transport

truck unless the person has a shipping document for its transportation that complies with this

section. A refiner, a terminal operator, a fuel alcohol provider, and the operator of a bulk plant

must give a shipping document to the person who operates a railroad tank car or a transport truck

into which motor fuel is loaded at the terminal rack or bulk plant rack.

(b) Content. – A shipping document is a permanent record that must contain the

following information and any other information required by the Secretary:

(1) Identification, including address, of the terminal or bulk plant from which the

motor fuel was received.

(1a) The type of motor fuel loaded.

(2) The date the motor fuel was loaded.

(3) The gross gallons loaded if the motor fuel is loaded onto a transport truck, and

the gross pounds loaded if the motor fuel is loaded onto a railroad tank car.

(3a) The motor fuel transporter for the motor fuel.

(4) The destination state of the motor fuel, as represented by the purchaser of the

motor fuel or the purchaser's agent.

(5) If the document is issued by a refiner or a terminal operator, the document

must be machine printed. If the motor fuel is loaded onto a transport truck, the

document must contain the following information:

a. The net gallons loaded.

b. A tax responsibility statement indicating the name of the supplier that

is responsible for the tax due on the motor fuel.

(c) Reliance. – A person who issues a shipping document may rely on the representation

made by the purchaser of motor fuel or the purchaser's agent concerning the destination state of

the motor fuel. A purchaser is liable for any tax due as a result of the purchaser's diversion of

fuel from the represented destination state.

(d) Duties of Transporter. – A person to whom a shipping document was issued must do

all of the following:

(1) Carry the shipping document in the conveyance for which it was issued when

transporting the motor fuel described in it.

(2) Show the shipping document to a law enforcement officer upon request when


(3) Deliver motor fuel described in the shipping document to the destination state

printed on it unless the person does all of the following:

a. Notifies the Secretary before transporting the motor fuel into a state

other than the printed destination state that the person has received

instructions since the shipping document was issued to deliver the

motor fuel to a different destination state.

b. Receives from the Secretary a confirmation number authorizing the

diversion.


c. Writes on the shipping document the change in destination state and

the confirmation number for the diversion.

(4) Give a copy of the shipping document to the distributor or other person to

whom the motor fuel is delivered.

(e) Duties of Person Receiving Shipment. – A person to whom motor fuel is delivered by

railroad tank car or transport truck may not accept delivery of the motor fuel if the destination

state shown on the shipping document for the motor fuel is a state other than North Carolina. To

determine if the shipping document shows North Carolina as the destination state, the person to

whom the fuel is delivered must examine the shipping document and must keep a copy of the

shipping document. The person must keep a copy at the place of business where the motor fuel

was delivered for 90 days from the date of delivery and must keep it at that place or another

place for at least three years from the date of delivery. A person who accepts delivery of motor

fuel in violation of this subsection is jointly and severally liable for any tax due on the fuel.

(f) Sanctions Against Transporter. – The acts listed in this subsection are grounds for a

civil penalty. The penalty is payable to the agency that assessed the penalty and is payable by the

person in whose name the conveyance is registered, if the conveyance is a transport truck, and is

payable by the person responsible for the movement of motor fuel in the conveyance, if the

conveyance is a railroad tank car. The amount of the penalty is five thousand dollars ($5,000). A

penalty imposed under this subsection is in addition to any motor fuel tax assessed. The grounds

for a civil penalty are:

(1) Transporting motor fuel in a railroad tank car or transport truck without a

shipping document or with a false or an incomplete shipping document.

(2) Delivering motor fuel to a destination state other than that shown on the

shipping document.

(g) Penalty Defense. – Compliance with the conditions set out in this subsection is a

defense to a civil penalty imposed under subsection (f) of this section as a result of the delivery

of fuel to a state other than the destination state printed on the shipping document for the fuel.

The Secretary must waive a penalty imposed against a person under that subsection if the person

establishes a defense under this subsection. The conditions for the defense are:

(1) The person notified the Secretary of the diversion and received a confirmation

number for the diversion before the imposition of the penalty.

(2) Tax was timely paid on the diverted fuel, unless the person is a motor fuel

transporter.

(h) Sanctions. – The Secretary may assess a civil penalty of five thousand dollars

($5,000) against a person who intentionally issues a shipping document that does not satisfy the

requirements of subsection (b) of this section. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c.

647, ss. 39, 40; 2002-108, s. 15; 2003-349, s. 10.9; 2005-435, s. 16; 2007-527, ss. 16(b), 18(a);

2008-134, s. 50; 2009-445, s. 36(a); 2014-3, s. 9.9(a).)

§ 105-449.115A. Shipping document required to transport fuel by tank wagon.

(a) Issuance. – A person who operates a tank wagon into which motor fuel is loaded at

the terminal must comply with the document requirements in G.S. 105-449.115(b). A person

who operates a tank wagon into which motor fuel is loaded from some other source must have an

invoice, bill of sale, or shipping document containing the following information and any other


(1) The name and address of the person from whom the motor fuel was received.


(2) The date the fuel was loaded.

(3) The type of fuel.

(4) The gross number of gallons loaded.

(b) Duties of Transporter. – A person to whom an invoice, bill of sale, or shipping

document was issued must do all of the following:

(1) Carry the invoice, bill of sale, or shipping document in the conveyance for

which it is issued when transporting the motor fuel described in it.

(2) Show the invoice, bill of sale, or shipping document upon request when


(3) Keep a copy of the invoice, bill of sale, or shipping document at a centralized

place of business for at least three years from the date of delivery.

(c) Sanctions. – Transporting motor fuel in a tank wagon without an invoice, bill of sale,

or shipping document containing the information required by this section is grounds for a civil

penalty. The penalty is payable to the agency that assessed the penalty and is payable by the

person in whose name the tank wagon is registered. The amount of the penalty is one thousand

dollars ($1,000). A penalty imposed under this subsection is in addition to any motor fuel tax

assessed. (2002-108, s. 16; 2005-435, s. 17; 2007-527, s. 16(c).)


§ 105-449.117. Penalties for highway use of dyed diesel or other non-tax-paid fuel.

(a) Violation. – It is unlawful to use dyed diesel fuel or other non-tax-paid fuel in a

highway vehicle that is licensed or required to be licensed under Chapter 20 of the General

Statutes unless that use is allowed under section 4082 of the Code. It is unlawful to use motor

fuel or alternative fuel in a highway vehicle that is licensed or required to be licensed under

Chapter 20 of the General Statutes unless the tax imposed by this Article or Article 36D of this

Chapter and the tax imposed by Article 3 of Chapter 119 of the General Statutes have been paid.

A person who violates this section is guilty of a Class 1 misdemeanor and is liable for a civil

penalty.

(b) Civil Penalty. – The civil penalty is payable to the agency that assessed the penalty

and is payable by the person in whose name the highway vehicle is registered. The amount of the

penalty depends on the amount of fuel in the supply tank of the highway vehicle. The penalty is

the greater of one thousand dollars ($1,000) or five times the amount of motor fuel tax payable

on the fuel in the supply tank. A penalty imposed under this section is in addition to any motor

fuel tax assessed.

(c) Enforcement. – The Secretary or a person designated by the Secretary may conduct

investigations to identify violations of this Article. It is not a valid defense to a violation of this

Article that the State is exempt from the tax imposed by this Article. (1995, c. 390, s. 3;

1997-60, s. 19; 2003-349, s. 10.10; 2007-527, s. 16(d); 2008-134, s. 51.)

§ 105-449.118. Civil penalty for buying or selling non-tax-paid motor fuel.

A person who dispenses non-tax-paid motor fuel into the supply tank of a highway vehicle or

who allows non-tax-paid motor fuel to be dispensed into the supply tank of a highway vehicle is

subject to a civil penalty of two hundred fifty dollars ($250.00) per occurrence.

The penalty is payable to the agency that assessed the penalty. Failure to pay a penalty

imposed under this section is grounds under G.S. 20-88.01(b) to withhold or revoke the


registration plate of the motor vehicle into which the motor fuel was dispensed. (1995, c. 390, s.

3; 2002-108, s. 17; 2007-527, s. 16(e).)

§ 105-449.118A. Civil penalty for refusing to allow the taking of a motor fuel sample.

A person who refuses to allow the taking of a motor fuel sample is subject to a civil penalty

of one thousand dollars ($1,000). The penalty is payable to the agency that assessed the penalty.

If the refusal is for a sample to be taken from a vehicle, the penalty is payable by the person in

whose name the vehicle is registered. If the refusal is for a sample to be taken from any other

storage tank or container, the penalty is payable by the owner of the container. (1995 (Reg. Sess.,

1996), c. 647, s. 41; 2007-527, s. 16(f).)

§ 105-449.119. Review of civil penalty assessment.

A person who denies liability for a penalty imposed under this Part may request the Secretary

to waive the penalty. The Secretary may reduce or waive a penalty as provided in Article 9 of

this Chapter. (1995, c. 390, s. 3; 1999-337, s. 44; 2007-491, s. 41; 2014-3, s. 9.8(b).)

§ 105-449.120. Acts that are misdemeanors.

(a) Class 1. – A person who commits any of the following acts is guilty of a Class 1

misdemeanor:

(1) Fails to obtain a license required by this Article.

(2) Willfully fails to file a return required by this Article.

(3) Willfully fails to pay a tax when due under this Article or under former Article

36 or 36A of this Chapter. Failure to comply with a requirement of a supplier

to remit tax payable to the supplier by electronic funds transfer is considered a

failure to make a timely payment.

(3a) Repealed by Session Laws 2006-162, s. 17, effective January 1, 2007, and


(4) Makes a false statement in an application, a return, or a statement required

under this Article.

(5) Makes a false statement in an application for a refund.

(6) Fails to keep records as required under this Article.

(7) Refuses to allow the Secretary or a representative of the Secretary to examine

the person's books and records concerning motor fuel.

(8) Fails to disclose the correct amount of motor fuel sold or used in this State.

(9) Fails to file a replacement bond or an additional bond as required under this

Article.

(10) Fails to show or give a shipping document as required under this Article.

(11) Willfully refuses to allow a licensed distributor, a licensed exporter, or a

licensed importer to defer payment of tax to the supplier, as required by G.S.

105-449.91.

(12) Willfully refuses to allow a licensed distributor or a licensed importer to take

the discount allowed by G.S. 105-449.93 when remitting tax to the supplier.

(b) Class 2. – A person who commits any of the following acts is guilty of a Class 2

misdemeanor:

(1) Knowingly dispenses non-tax-paid motor fuel into the supply tank of a

highway vehicle.


(2) Knowingly allows non-tax-paid fuel to be dispensed into the supply tank of a

highway vehicle. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 42;

1997-60, s. 20; 2006-162, s. 17.)

§ 105-449.121. Record-keeping requirements; inspection authority.

(a) What Must Be Kept. – A person who is subject to audit under subsection (b) of this

section must keep a record of all shipping documents or other documents used to determine

information the person provides in a return or to determine the person's motor fuel transactions.

The records must be kept for three years from the due date of the return to which the records

apply or, if the records apply to a transaction not required to be reported in a return, for three

years from the date of the transaction.

(b) Inspection. – The Secretary or a person designated by the Secretary may do any of the

following to determine tax liability under this Article:

(1) Audit a person who is required to have or elects to have a license under this

Article.

(2) Audit a distributor, a retailer, a bulk end-user, or a motor fuel user that is not

licensed under this Article.

(3) Examine a tank or other equipment used to make, store, or transport motor

fuel, diesel dyes, or diesel markers.

(4) Take a sample of a product from a vehicle, a tank, or another container in a

quantity sufficient to determine the composition of the product.

(5) Stop a vehicle for the purpose of taking a sample of motor fuel from the

vehicle. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 43; 2000-173,

s. 18; 2008-134, s. 52; 2009-445, s. 37.)

§ 105-449.122. Equipment requirements.

(a) Metered Pumps. – All motor fuel dispensed at retail must be dispensed from metered

pumps that indicate the total amount of fuel measured through the pumps. Each pump must be

marked to indicate the type of motor fuel dispensed.

(b) Truck Equipment. – A highway vehicle that transports diesel fuel in a tank that is

separate from the fuel supply tank of the vehicle may not have a connection from the

transporting tank to the motor or to the supply tank of the vehicle. (1995, c. 390, s. 3; 1997-60, s.

21.)

§ 105-449.123. Marking requirements for dyed fuel storage facilities.

(a) Requirements. – A person who is a retailer of dyed motor fuel or who stores both

dyed and undyed motor fuel for use by that person or another person must mark the storage

facility for the dyed motor fuel as follows in a manner that clearly indicates the fuel is not to be

used to operate a highway vehicle. The storage facility must be marked "Dyed Diesel,

Nontaxable Use Only, Penalty For Taxable Use" or "Dyed Kerosene, Nontaxable Use Only,

Penalty for Taxable Use" or a similar phrase that clearly indicates the fuel is not to be used to

operate a highway vehicle. A person who intentionally fails to mark the storage facility as

required by this section is subject to a civil penalty equal to the excise tax at the motor fuel rate

on the inventory held in the storage tank at the time of the violation. If the inventory cannot be

determined, then the penalty is calculated on the capacity of the storage tank.


(1) The storage tank of the storage facility must be marked if the storage tank is

visible.

(2) The fillcap or spill containment box of the storage facility must be marked.

(3) The dispensing device that serves the storage facility must be marked.

(4) The retail pump or dispensing device at any level of the distribution system

must comply with the marking requirements.

(b) Exception. – The marking requirements of this section do not apply to a storage

facility that contains fuel used only for one of the purposes listed in G.S. 105-449.105A(a)(1)

and is installed in a manner that makes use of the fuel for any other purpose improbable.

(1997-60, s. 22; 2001-205, s. 7; 2003-349, s. 10.11; 2004-170, s. 31; 2005-435, s. 18.)


Part 7. Use of Revenue.

§ 105-449.125. (Effective until June 30, 2016) Distribution of tax revenue among various

funds and accounts.

The Secretary shall allocate the amount of revenue collected under this Article from an

excise tax of one-half cent (1/2¢) a gallon to the following funds and accounts in the fraction

indicated:

Fund or Account Amount

Commercial Leaking Petroleum

Underground Storage Tank Cleanup Fund Nineteen thirty-seconds

Noncommercial Leaking Petroleum

Underground Storage Tank Cleanup Fund Three thirty-seconds

Water and Air Quality Account Five-sixteenths.

The Secretary shall allocate seventy-one percent (71%) of the remaining excise tax revenue

collected under this Article to the Highway Fund and shall allocate twenty-nine percent (29%) to

the Highway Trust Fund.

The Secretary shall charge a proportionate share of a refund allowed under this Article to

each fund or account to which revenue collected under this Article is credited. The Secretary

shall credit revenue or charge refunds to the appropriate funds or accounts on a monthly basis.

(1995, c. 390, s. 3; 2015-241, s. 29.27B(a).)

§ 105-449.125. (Effective June 30, 2016) Distribution of tax revenue among various funds

and accounts.

The Secretary shall allocate the amount of revenue collected under this Article from an

excise tax of one-half cent (1/2¢) a gallon to the following funds and accounts in the fraction

indicated:

Fund or Account Amount

Commercial Leaking Petroleum

Underground Storage Tank Cleanup Fund Nineteen thirty-seconds

Water and Air Quality Account Five-sixteenths.

The Secretary shall allocate seventy-one percent (71%) of the remaining excise tax revenue

collected under this Article to the Highway Fund and shall allocate twenty-nine percent (29%) to

the Highway Trust Fund.


The Secretary shall charge a proportionate share of a refund allowed under this Article to

each fund or account to which revenue collected under this Article is credited. The Secretary

shall credit revenue or charge refunds to the appropriate funds or accounts on a monthly basis.

(1995, c. 390, s. 3; 2015-241, ss. 29.27B(a), (b).)

§ 105-449.126. Distribution of part of Highway Fund allocation to Wildlife Resources Fund

and Shallow Draft Navigation Channel Dredging and Lake Maintenance Fund.

(a) The Secretary shall credit to the Wildlife Resources Fund one-sixth of one percent

(1/6 of 1%) of the amount that is allocated to the Highway Fund under G.S. 105-449.125 and is

from the excise tax on motor fuel. Revenue credited to the Wildlife Resources Fund under this

section may be used only for the boating and water safety activities described in G.S. 75A-3(c).

The Secretary must credit revenue to the Wildlife Resources Fund on a quarterly basis. The

Secretary must make the distribution within 45 days of the end of each quarter.

(b) The Secretary shall credit to the Shallow Draft Navigation Channel Dredging and

Lake Maintenance Fund one percent (1%) of the amount that is allocated to the Highway Fund

under G.S. 105-449.125 and is from the excise tax on motor fuel. Revenue credited to the

Shallow Draft Navigation Channel Dredging and Lake Maintenance Fund under this section may

be used only for the dredging activities described in G.S. 143-215.73F. The Secretary shall credit

revenue to the Shallow Draft Navigation Channel Dredging and Lake Maintenance Fund on a

quarterly basis. The Secretary must make the distribution within 45 days of the end of each

quarter. (1995, c. 390, s. 3; c. 507, s. 18.16; 2013-360, s. 14.22(g); 2014-100, s. 14.18(a);

2015-241, s. 29.4(a).)

§ 105-449.127: Repealed by Session Laws 2006-162, s. 12(c), effective July 24, 2006.



Article 36D.

Alternative Fuel.



(1) Alternative fuel. – A combustible gas or liquid that can be used to generate

power to operate a highway vehicle and that is not subject to tax under Article

36C of this Chapter.

(1a) Bulk end-user. – A person who maintains storage facilities for alternative fuel

and uses part or all of the stored fuel to operate a highway vehicle.

(1f) Diesel gallon equivalent of liquefied natural gas. – The energy equivalent of

6.06 pounds of liquefied natural gas.

(1g) Gas gallon equivalent of compressed natural gas. – The energy equivalent of

5.66 pounds of compressed natural gas.

(1h) Gas gallon equivalent of liquefied propane gas. – The energy equivalent of

5.75 pounds of liquefied propane gas.

(2) Highway. – Defined in G.S. 105-449.60.


(3) Highway vehicle. – Defined in G.S. 105-449.60.

(4) Motor fuel. – Defined in G.S. 105-449.60.

(5) Motor fuel rate. – Defined in G.S. 105-449.60.

(6) Provider of alternative fuel. – A person who does one or more of the

following:

a. Acquires alternative fuel for sale or delivery to a bulk end-user or a

retailer.

b. Maintains storage facilities for alternative fuel, part or all of which the

person uses or sells to someone other than a bulk end-user or a retailer

to operate a highway vehicle.

c. Sells alternative fuel and uses part of the fuel acquired for sale to

operate a highway vehicle by means of a fuel supply line from the

cargo tank of the vehicle to the engine of the vehicle.

d. Imports alternative fuel to this State, by a means other than the usual

tank or receptacle connected with the engine of a highway vehicle, for

use by that person to operate a highway vehicle.

(7) Retailer. – A person who maintains storage facilities for alternative fuel and

who sells the fuel at retail or dispenses the fuel at a retail location to operate a

highway vehicle. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 44;

2008-134, s. 53; 2014-4, s. 30(a), (b); 2015-224, s. 1.)

§ 105-449.131. List of persons who must have a license.

A person may not engage in business in this State as any of the following unless the person

has a license issued by the Secretary authorizing the person to engage in that business:

(1) A provider of alternative fuel.

(2) A bulk end-user.

(3) A retailer. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 45;

2008-134, s. 54.)

§ 105-449.132. How to apply for a license.

To obtain a license, an applicant must file an application with the Secretary on a form

provided by the Secretary. An application must include the applicant's name, address, federal

employer identification number, and any other information required by the Secretary. An

applicant must meet the requirements for obtaining a license set out in G.S. 105-449.69(b).

(1995, c. 390, s. 3; 1998-146, s. 11.)

§ 105-449.133. Bond or letter of credit required as a condition of obtaining and keeping

certain licenses.

(a) Who Must Have Bond. – The following applicants for a license must file with the

Secretary a bond or an irrevocable letter of credit:

(1) An alternative fuel provider.

(2) A retailer or a bulk end-user that intends to store highway and nonhighway

alternative fuel in the same storage facility.

(b) Amount. – The amount of the bond is the amount that would be required if the fuel

the applicant intended to provide or store was motor fuel rather than alternative fuel. An

applicant that is also required to file a bond or an irrevocable letter of credit under G.S.


105-449.72 to obtain a license as a distributor of motor fuel may file a single bond or irrevocable

letter of credit under that section for the combined amount.

A bond filed under this subsection must be conditioned upon compliance with this Article, be

payable to the State, and be in the form required by the Secretary. The Secretary may require a

bond issued under this subsection to be adjusted in accordance with the procedure set out in G.S.

105-449.72 for adjusting a bond filed by a distributor of motor fuel. (1995, c. 390, s. 3; 1997-60,

s. 23; 2008-134, s. 55.)

§ 105-449.134. Denial or cancellation of license.

The Secretary may deny an application for a license or cancel a license under this Article for

the same reasons that the Secretary may deny an application for a license or cancel a license

under Article 36C of this Chapter. The procedure in Article 36C for cancelling a license applies

to the cancellation of a license under this Article. (1995, c. 390, s. 3; 1995 (Reg. Sess., 1996), c.

647, s. 46.)

§ 105-449.135. Issuance of license; notification of changes.

(a) Issuance. – The Secretary must issue a license to each applicant whose application is

approved. A license is not transferable and remains in effect until surrendered or cancelled.

(b) Notice. – A license holder that stops engaging in this State in the business for which

the license was issued must give the Secretary written notice of the change and must surrender

the license. The notice must give the date the change takes effect and, if the license holder has

transferred the business to another by sale or otherwise, the date of the transfer and the name and

address of the person to whom the business is transferred.

All taxes for which the license holder is liable under this Article but are not yet due become

due on the date of the change. If the license holder transfers the business to another and does not

give the notice required by this section, the person to whom the business was transferred is liable

for the amount of any tax the license holder owed the State on the date the business was

transferred. The liability of the person to whom the business is transferred is limited to the value

of the property acquired from the license holder. (1995, c. 390, s. 3.)

§ 105-449.136. Tax on alternative fuel.

(a) Rate. – A tax at the motor fuel rate is imposed on liquid alternative fuel used to

operate a highway vehicle by means of a vehicle supply tank that stores fuel only for the purpose

of supplying fuel to operate the vehicle. The tax on liquefied natural gas is imposed on each

diesel gallon equivalent of liquefied natural gas. The tax on liquefied propane gas is imposed on

each gas gallon equivalent of liquefied propane gas. A tax at the equivalent of the motor fuel rate

is imposed on all other alternative fuel used to operate a highway vehicle. The tax on compressed

natural gas is imposed on each gas gallon equivalent of compressed natural gas. The Secretary

must determine the equivalent rate for all other non-liquid alternative fuels.

(b) Administration. – The exemptions from the tax on motor fuel in G.S. 105-449.88

apply to the tax imposed by this section. The refunds for motor fuel tax allowed by Part 5 of

Article 36C of this Chapter apply to the tax imposed by this section, except that the refund

allowed by G.S. 105-449.107(b) for certain vehicles that use power takeoffs does not apply to a

vehicle whose use of alternative fuel is taxed on the basis of miles driven. The proceeds of the

tax imposed by this section must be allocated in accordance with G.S. 105-449.125. (1995, c.


390, s. 3; 1995 (Reg. Sess., 1996), c. 647, s. 47; 2009-445, s. 38; 2014-4, s. 30(c); 2015-224, s.

2.)

§ 105-449.137. Liability for and payment of the tax.

(a) Liability. – A bulk end-user or retailer that stores highway and nonhighway

alternative fuel in the same storage facility is liable for the tax imposed by this Article. The tax

payable by a bulk end-user or retailer applies when fuel is withdrawn from the storage facility.

The alternative fuel provider that sells or delivers alternative fuel is liable for the tax imposed by

this Article on all other alternative fuel.

(b) Payment. – The tax imposed by this Article is payable when a return is due. A return

is due on the same date as a monthly return due under G.S. 105-449.90. A monthly return covers

liabilities that accrue in the calendar month preceding the date the return is due. A return must be

filed with the Secretary and must be in the form and contain the information required by the

Secretary. (1995, c. 390, s. 3; 1997-60, s. 24; 2006-162, s. 15(d); 2008-134, s. 56.)

§ 105-449.138. Requirements for bulk end-users and retailers.

(a) Informational Return. – A bulk end-user and a retailer must file a quarterly

informational return with the Secretary. A quarterly return covers a calendar quarter and is due

by the last day of the month that follows the quarter covered by the return.

The return must give the following information and any other information required by the

Secretary:

(1) The amount of alternative fuel received during the quarter.

(2) The amount of alternative fuel sold or used during the quarter.

(b) Storage. – A bulk end-user or a retailer may store highway and nonhighway

alternative fuel in separate storage facilities or in the same storage facility. If highway and

nonhighway alternative fuel are stored in separate storage facilities, the facility for the

nonhighway fuel must be marked in accordance with the requirements set by G.S. 105-449.123

for dyed diesel storage facilities. If highway and nonhighway alternative fuel are stored in the

same storage facility, the storage facility must be equipped with separate metering devices for

the highway fuel and the nonhighway fuel. If the Secretary determines that a bulk end-user or

retailer used or sold alternative fuel to operate a highway vehicle when the fuel was dispensed

from a storage facility or through a meter marked for nonhighway use, all fuel delivered into that

storage facility is presumed to have been used to operate a highway vehicle. (1995, c. 390, s. 3;

1995 (Reg. Sess., 1996), c. 647, s. 48; 1997-60, s. 25; 2008-134, s. 57.)

§ 105-449.139. Miscellaneous provisions.

(a) Records. – A license holder must keep a record of all documents used to determine

the information provided in a return filed under this Article. The records must be kept for three

years from the due date of the return to which the records apply. The records are open to

inspection during business hours by the Secretary or a person designated by the Secretary.

(b) Violations. – The offenses listed in subdivisions (1) through (9) of G.S. 105-449.120

apply to this Article. In applying those offenses to this Article, references to "this Article" are to

be construed as references to Article 36D and references to "motor fuel" are to be construed as

references to alternative fuel.

(c) Lists. – The Secretary must give a list of licensed alternative fuel providers to each

licensed bulk end-user and licensed retailer. The Secretary must also give a list of licensed bulk


end-users and licensed retailers to each licensed alternative fuel provider. A list must state the

name, account number, and business address of each license holder on the list. The Secretary

must send an annual update of a list to each license holder, as appropriate. (1995, c. 390, s. 3;

1995 (Reg. Sess., 1996), c. 647, s. 49; 2008-134, s. 58.)

SUBCHAPTER VI. TAX RESEARCH.

Article 37.

Tax Research.


SUBCHAPTER VII. PAYMENTS RECEIVED FROM TENNESSEE VALLEY

AUTHORITY IN LIEU OF TAXES.

Article 38.

Equitable Distribution between Local Governments.

§ 105-458. Apportionment of payments in lieu of taxes between local units.

The payments received by the State and local governments from the Tennessee Valley

Authority in lieu of taxes under section 13 of the Act of Congress creating it, and as amended,

shall be apportioned between the local governments in which the property is owned or an

operation is carried on, on the basis of each local government's percentage of the total value of

the Authority's property in the State, determined as hereinafter provided: Provided, however, that

the minimum annual payment to any local government from said fund, including the amounts

paid direct to said local government by the Authority, shall not be less than the amount of annual

actual tax loss to such local government based upon the two-year average on said property next

prior to it being taken over by the Authority. (1941, c. 85, s. 1; 1959, c. 1060; 2009-569, s. 1.)

§ 105-459. Proration of T.V.A. funds.

The Department of Revenue shall determine each year, on the basis of current tax laws, the

allocation of the Authority's valuation among the local governments in the same manner as if the

property owned or operated by the Authority were owned or operated by a privately owned

public utility. The Department of Revenue and the Treasurer of the State of North Carolina shall

then prorate the funds received from the Authority by the State and local governments between

the local governments upon the basis of the foregoing calculations. (1941, c. 85, s. 2; 1959, c.

1060; 1973, c. 476, s. 193; 2009-569, s. 2.)

§ 105-460. Distribution of funds by State Treasurer.

The Treasurer of the State of North Carolina shall then ascertain the payments to be made to

the local governments upon the basis of the provisions of G.S. 105-459 and he is authorized and

directed to distribute the same between the local governments in accordance with the foregoing

provisions of G.S. 105-459. The Treasurer of the State of North Carolina is further authorized

and directed to pay said sums to the local governments each month or so often as he shall receive

payments from the Authority, but not more often than once each month, after first deducting

from any sum to be paid a local government such amount as has theretofore been paid direct to


said local government by the Authority for the same period: Provided, however, that the

minimum annual payment to any local government from said fund shall not be less than the

average annual tax on the property taken by the Authority for the two years next preceding the

taking. (1941, c. 85, s. 3; 1959, c. 1060.)

§ 105-461. Duty of finance officer, etc.

The finance officer or other proper officer of each local government to which this Subchapter

is applicable shall certify each month to the Treasurer of the State of North Carolina a statement

of the amount received by the local government direct from the Authority.

No local government shall be entitled to receive its distributive share of said fund from the

Treasurer of the State of North Carolina until the foregoing information has been properly

furnished. If any such local government shall fail to furnish the information herein required

within 10 days from and after receipt by it from the Department of Revenue of request for the

same, forwarded by registered mail, then and in that event it shall be barred from participating in

the benefits provided for the period for which the same is requested. (1941, c. 85, s. 4; 1973, c.

476, s. 193; 2009-569, s. 3.)

§ 105-462. Local units entitled to benefits; prerequisite for payments.

Any local governments within the State in which the Authority now or may hereafter own

property or carry on an operation shall be entitled to the benefits arising under this Subchapter:

Provided, however, that no payment shall be made to them by the Treasurer of the State of North

Carolina until such time as such local governments shall have certified to the Department of

Revenue and the Treasurer of the State of North Carolina the average annual tax loss it has

sustained by the taking of said property for the two years immediately preceding the taking

thereof: Provided, further, that in the event of any disagreement between said local governments

and the Treasurer of the State of North Carolina as to such annual tax loss, then the same shall be

determined by the Department of Revenue, and its decision thereon shall be final. (1941, c. 85, s.

5; 1973, c. 476, s. 193.)

SUBCHAPTER VIII. LOCAL GOVERNMENT SALES AND USE TAX.

Article 39.

First One-Cent (1¢) Local Government Sales and Use Tax.


This Article shall be known as the First One-Cent (1¢) Local Government Sales and Use Tax

Act. (1971, c. 77, s. 2; 2002-123, s. 7(b).)

§ 105-464. Purpose and intent.

It is the purpose of this Article to afford the counties and municipalities of this State with

opportunity to obtain an added source of revenue with which to meet their growing financial

needs by providing all counties of the State with authority to levy a one percent (1%) sales and

use tax as hereinafter provided. (1971, c. 77, s. 2.)

§ 105-465. County election as to adoption of local sales and use tax.


The board of elections of any county, upon the written request of the board of county

commissioners, or upon receipt of a petition signed by qualified voters of the county equal in

number to at least fifteen percent (15%) of the total number of votes cast in the county, at the last

preceding election for the office of Governor, shall call a special election for the purpose of

submitting to the voters of the county the question of whether a one percent (1%) sales and use

tax will be levied.

The special election shall be held under the same rules applicable to the election of members

of the General Assembly.

The county board of elections shall prepare ballots for the special election. The question

presented on the ballot shall be "FOR one percent (1%) local sales and use tax on items subject

to State sales and use tax at the general State rate and on food" or "AGAINST one percent (1%)

local sales and use tax on items subject to State sales and use tax at the general State rate and on

food".

The county board of elections shall fix the date of the special election on a date permitted by

G.S. 163-287, except that the special election shall not be held within one year from the date of

the last preceding special election under this section. (1971, c. 77, s. 2; 1981, c. 560, s. 2; 1991,

c. 689, s. 315; 1996, 2nd Ex. Sess., c. 13, s. 1.2; 2013-381, s. 10.8.)

§ 105-466. Levy of tax.

(a) In the event a majority of those voting in a special election held pursuant to G.S.

105-465 shall approve the levy of the local sales and use tax, the board of county commissioners

may, by resolution, proceed to levy the tax.

(b) In addition, the board of county commissioners may, in the event no election has been

held within five years under the provisions of G.S. 105-465 in which the tax has been defeated,

after not less than 10 days' public notice and after a public hearing held pursuant thereto, by

resolution, impose and levy the local sales and use tax to the same extent and with the same

effect as if the levy of the tax had been approved in an election held pursuant to G.S. 105-465.

(b1) If the board of commissioners of a county has imposed the local sales and use tax

authorized by this Article and any or all of the taxes authorized by Articles 40 and 42 of this

Chapter, with or without a special election, and the county subsequently becomes part of a

consolidated city-county, the taxes shall continue in effect unless and until repealed by the

governing board of the consolidated city-county.

(c) Collection of the tax, and liability therefor, must begin and continue only on and after

the first day of a calendar quarter, as set by the board of county commissioners in the resolution

levying the tax. In no event may the tax be imposed, or the tax rate changed, earlier than the first

day of the second succeeding calendar month after the date of the adoption of the resolution. The

county must give the Secretary at least 90 days advance notice of a new tax levy or tax rate

change. The applicability of a new tax or a tax rate change to purchases from printed catalogs

becomes effective on the first day of a calendar quarter after a minimum of 120 days from the

date the Secretary notifies the seller that receives orders by means of a catalog or similar

publication of the new tax or tax rate change.

(d) Upon adoption of a resolution levying the tax, the board of county commissioners

shall immediately deliver a certified copy of the resolution to the Secretary, accompanied by a

certified statement from the county board of elections, if applicable, setting forth the results of

any special election approving the tax in the county. Upon receipt of these documents, the

Secretary shall collect and administer the tax as provided in this Article. (1971, c. 77, s. 2; 1973,


c. 302; c. 476, s. 193; 1977, c. 372, s. 1; 1993, c. 485, s. 22; 1995, c. 461, s. 16; 2000-120, s. 12;

2001-414, s. 28; 2003-284, s. 45.10; 2010-95, s. 12.)

§ 105-467. Scope of sales tax.

(a) Sales Tax. – The sales tax that may be imposed under this Article is limited to a tax at

the rate of one percent (1%) of the following:

(1) A retailer's net taxable sales and gross receipts that are subject to the general

rate of sales tax imposed by the State under G.S. 105-164.4 except the tax

does not apply to the sales price of an item taxable under G.S.

105-164.4(a)(1a).

(2) through (4) Repealed by Session Laws 2011-330, s. 45, effective June 27,

2011.

(5) The sales price of food that is not otherwise exempt from tax pursuant to G.S.

105-164.13 but is exempt from the State sales and use tax pursuant to G.S.

105-164.13B.

(5a) The sales price of a bundled transaction that includes food subject to tax under

subdivision (5) of this subsection, if the price of the food exceeds ten percent

(10%) of the price of the bundle. A retailer must determine the price of food in

a bundled transaction in accordance with G.S. 105-164.4D.

(5b) Repealed by Session Laws 2013-3.4(c), effective July 1, 2014, and applicable

to purchases made on or after that date.

(6), (7) Repealed by Session Laws 2011-330, s. 45, effective June 27, 2011.

(b) Exemptions and Refunds. – The State exemptions and exclusions contained in G.S.

105-164.13 apply to the local sales and use tax authorized to be levied and imposed under this

Article. The State refund provisions contained in G.S. 105-164.14 through G.S. 105-164.14B

apply to the local sales and use tax authorized to be levied and imposed under this Article. A

refund of an excessive or erroneous State sales tax collection allowed under G.S. 105-164.11 and

a refund of State sales tax paid on a rescinded sale or cancelled service contract under G.S.

105-164.11A apply to the local sales and use tax authorized to be levied and imposed under this

Article. The aggregate annual local refund amount allowed an entity under G.S. 105-164.14(b)

for a fiscal year may not exceed thirteen million three hundred thousand dollars ($13,300,000).

Except as provided in this subsection, a taxing county may not allow an exemption,

exclusion, or refund that is not allowed under the State sales and use tax. A local school

administrative unit and a joint agency created by interlocal agreement among local school

administrative units pursuant to G.S. 160A-462 to jointly purchase food service-related

materials, supplies, and equipment on their behalf is allowed an annual refund of sales and use

taxes paid by it under this Article on direct purchases of tangible personal property and services.

Sales and use tax liability indirectly incurred by the entity on building materials, supplies,

fixtures, and equipment that become a part of or annexed to any building or structure that is

owned or leased by the entity and is being erected, altered, or repaired for use by the entity is

considered a sales or use tax liability incurred on direct purchases by the entity for the purpose of

this subsection. The refund allowed under this subsection does not apply to purchases of

electricity, telecommunications service, ancillary service, piped natural gas, video programming,

or a prepaid meal plan. A request for a refund is due in the same time and manner as provided in

G.S. 105-164.14(c). Refunds applied for more than three years after the due date are barred.


(c) Sourcing. – The sourcing principles in G.S. 105-164.4B apply in determining whether

the local sales tax applies to a transaction. (1971, c. 77, s. 2; 1983 (Reg. Sess., 1984), c. 1097, s.

9; 1987, c. 557, s. 7; c. 832, s. 4; 1989, c. 692, s. 3.7; 1991, c. 689, s. 316; 1996, 2nd Ex. Sess., c.

13, s. 1.3; 1998-98, s. 30.1; 1998-171, s. 9; 2001-347, s. 2.15; 2001-414, s. 29; 2001-424, s.

34.16(b); 2001-430, s. 13; 2001-487, s. 67(e); 2002-16, s. 12; 2002-159, s. 61; 2005-276, s.

33.23; 2006-66, s. 7.20(a); 2006-162, s. 32; 2007-244, s. 6; 2007-368, s. 2; 2008-107, s. 28.12(c);

2010-166, s. 3.8; 2011-330, s. 45; 2013-316, ss. 3.1(c), 3.4(c), (d); 2013-414, s. 49(b); 2014-3,

ss. 6.1(i), 8.2(b); 2015-259, s. 4.2(f).)

§ 105-468. Scope of use tax.

The use tax authorized by this Article is a tax at the rate of one percent (1%) of the cost price

of each item or article of tangible personal property that is not sold in the taxing county but is

used, consumed, or stored for use or consumption in the taxing county. The tax applies to the

same items that are subject to tax under G.S. 105-467. The collection and administration of this

tax shall be in accordance with Article 5 of Chapter 105 of the General Statutes.

Where a local sales or use tax was due and has been paid with respect to tangible personal

property by the purchaser in another taxing county within the State, or where a local sales or use

tax was due and has been paid in a taxing jurisdiction outside the State where the purpose of the

tax is similar in purpose and intent to the tax which may be imposed pursuant to this Article, the

tax paid may be credited against the tax imposed under this section by a taxing county upon the

same property. If the amount of sales or use tax so paid is less than the amount of the use tax due

the taxing county under this section, the purchaser shall pay to the Secretary an amount equal to

the difference between the amount so paid in the other taxing county or jurisdiction and the

amount due in the taxing county. The Secretary may require such proof of payment in another

taxing county or jurisdiction as is deemed to be necessary. The use tax levied under this Article

is not subject to credit for payment of any State sales or use tax not imposed for the benefit and

use of counties and municipalities. No credit shall be given under this section for sales or use

taxes paid in a taxing jurisdiction outside this State if that taxing jurisdiction does not grant

similar credit for sales taxes paid under this Article. (1971, c. 77, s. 2; 1973, c. 476, s. 193; 1979,

2nd Sess., c. 1100, s. 2; 1989, c. 692, s. 3.8; 1991, c. 689, s. 317; 1996, 2nd Ex. Sess., c. 13, s.

1.4; 2012-79, s. 1.10; 2013-414, s. 49(a).)

§ 105-468.1. Certain building materials exempt from sales and use taxes.

The provisions of this Article shall not be applicable with respect to any building materials

purchased for the purpose of fulfilling any lump sum or unit price contract entered into or

awarded, or entered into or awarded pursuant to any bid made, before the effective date of the

tax imposed by a taxing county when, absent the provisions of this section, such building

materials would otherwise be subject to tax under the provisions of this Article. (1971, c. 77, s.

3.)

§ 105-469. Secretary to collect and administer local sales and use tax.

(a) (Effective until July 1, 2016) The Secretary shall collect and administer a tax levied

by a county pursuant to this Article. As directed by G.S. 105-164.13B, taxes levied by a county

on food are administered as if they were levied by the State under Article 5 of this Chapter. The

Secretary must, on a monthly basis, distribute local taxes levied on food to the taxing counties as

follows:


(1) The Secretary must allocate one-half of the net proceeds on a per capita basis


Secretary by the State Budget Officer. The Secretary must then adjust the

amount allocated to each county as provided in G.S. 105-486(b). The

Secretary must include one-half of the amount allocated under this subdivision

in the distribution made under Article 40 of this Chapter and must include the

remaining one-half in the distribution made under Article 42 of this Chapter.

(2) The Secretary must allocate the remaining net proceeds proportionately to

each taxing county based upon the amount of sales tax on food collected in the

taxing county in the 1997-1998 fiscal year under Article 39 of this Chapter or

under Chapter 1096 of the 1967 Session Laws relative to the total amount of

sales tax on food collected in all taxing counties in the 1997-1998 fiscal year

under Article 39 of this Chapter and under Chapter 1096 of the 1967 Session

Laws. The Secretary must include the amount allocated under this subdivision

in the distribution made under Article 39 of this Chapter.

(a) (Effective July 1, 2016) The Secretary shall collect and administer a tax levied by a

county pursuant to this Article. As directed by G.S. 105-164.13B, taxes levied by a county on

food are administered as if they were levied by the State under Article 5 of this Chapter. The

references in this section to Article 39 of this Chapter and Chapter 1096 of the 1967 Session

Laws and Articles 40 and 42 of this Chapter do not include the adjustments made pursuant to

G.S. 105-524. The Secretary must, on a monthly basis, distribute local taxes levied on food to the

taxing counties as follows:

(1) The Secretary must allocate one-half of the net proceeds on a per capita basis


Secretary by the State Budget Officer. The Secretary must then adjust the

amount allocated to each county as provided in G.S. 105-486(b). The

Secretary must include one-half of the amount allocated under this subdivision

in the distribution made under Article 40 of this Chapter and must include the

remaining one-half in the distribution made under Article 42 of this Chapter.

(2) The Secretary must allocate the remaining net proceeds proportionately to

each taxing county based upon the amount of sales tax on food collected in the

taxing county in the 1997-1998 fiscal year under Article 39 of this Chapter or

under Chapter 1096 of the 1967 Session Laws relative to the total amount of

sales tax on food collected in all taxing counties in the 1997-1998 fiscal year

under Article 39 of this Chapter and under Chapter 1096 of the 1967 Session

Laws. The Secretary must include the amount allocated under this subdivision

in the distribution made under Article 39 of this Chapter.

(b) The Secretary shall require retailers who collect use tax on sales to North Carolina

residents to ascertain the county of residence of each buyer and provide that information to the

Secretary along with any other information necessary for the Secretary to allocate the use tax

proceeds to the correct taxing county. (1971, c. 77, s. 2; 1973, c. 476, s. 193; 1993, c. 485, s. 23;

1996, 2nd Ex. Sess., c. 14, s. 12; 2003-284, s. 45.11(a); 2003-416, s. 27(a); 2004-170, s. 32;

2005-435, s. 41; 2015-268, s. 10.1(e2).)



§ 105-471. Retailer to collect sales tax.

Every retailer whose place of business is in a taxing county shall on and after the levy of the

tax herein authorized collect the one percent (1%) local sales tax provided by this Article.

The tax to be collected under this Article shall be collected as a part of the sales price of the

item of tangible personal property sold, the cost price of the item of tangible personal property

used, or as a part of the charge for the rendering of any services, renting or leasing of tangible

personal property, or the furnishing of any accommodation taxable hereunder. The tax shall be

stated and charged separately from the sales price or cost price and shall be shown separately on

the retailer's sales record and shall be paid by the purchaser to the retailer as trustee for and on

account of the State or county wherein the tax is imposed. It is the intent and purpose of this

Article that the local sales and use tax herein authorized to be imposed and levied by a taxing

county shall be added to the sales price and that the tax shall be passed on to the purchaser

instead of being borne by the retailer. The Secretary of Revenue shall design, print and furnish to

all retailers in a taxing county in which he shall collect and administer the tax the necessary

forms for filing returns and instructions to insure the full collection from retailers, and the

Secretary may adapt the present form used for the reporting and collecting of the State sales and

use tax to this purpose. (1971, c. 77, s. 2; 1973, c. 476, s. 193.)

§ 105-472. Disposition and distribution of taxes collected.

(a) County Allocation. – The Secretary shall, on a monthly basis, allocate to each taxing

county for which the Secretary collects the tax the net proceeds of the tax collected in that county

under this Article. For the purpose of this section, "net proceeds" means the gross proceeds of the

tax collected in each county under this Article less taxes refunded, the cost to the State of

collecting and administering the tax in the county as determined by the Secretary, and other

deductions that may be charged to the county. If the Secretary collects local sales or use taxes in

a month and the taxes cannot be identified as being attributable to a particular taxing county, the

Secretary shall allocate the taxes among the taxing counties in proportion to the amount of taxes

collected in each county under this Article during that month and shall include them in the

monthly distribution. Amounts collected by electronic funds transfer payments are included in

the distribution for the month in which the return that applies to the payment is received.

(b) Distribution Between Counties and Cities. – The Secretary shall divide the amount

allocated to each taxing county among the county and its municipalities in accordance with the

method determined by the county. The board of county commissioners shall, by resolution,

choose one of the following methods of distribution:

(1) Per Capita Method. – The net proceeds of the tax collected in a taxing county

shall be distributed to that county and to the municipalities in the county on a

per capita basis according to the total population of the taxing county, plus the

total population of the municipalities in the county. In the case of a

municipality located in more than one county, only that part of its population

living in the taxing county is considered its "total population". In order to

make the distribution, the Secretary shall determine a per capita figure by

dividing the amount allocated to each taxing county by the total population of

that county plus the total population of all municipalities in the county. The

Secretary shall then multiply this per capita figure by the population of the

taxing county and by the population of each municipality in the county; each

respective product shall be the amount to be distributed to the county and to


each municipality in the county. To determine the population of each county

and each municipality, the Secretary shall use the most recent annual estimate

of population certified by the State Budget Officer.

(2) Ad Valorem Method. – The net proceeds of the tax collected in a taxing

county shall be distributed to that county and the municipalities in the county

in proportion to the total amount of ad valorem taxes levied by each on

property having a tax situs in the taxing county during the fiscal year next

preceding the distribution. For purposes of this section, the amount of the ad

valorem taxes levied by a county or municipality includes ad valorem taxes

levied by the county or municipality in behalf of a taxing district and collected

by the county or municipality. In addition, the amount of taxes levied by a

county includes ad valorem taxes levied by a merged school administrative

unit described in G.S. 115C-513 in the part of the unit located in the county.

In computing the amount of tax proceeds to be distributed to each county and

municipality, the amount of any ad valorem taxes levied but not substantially

collected shall be ignored. Each county and municipality receiving a

distribution of the proceeds of the tax levied under this Article shall in turn

immediately share the proceeds with each district in behalf of which the

county or municipality levied ad valorem taxes in the proportion that the

district levy bears to the total levy of the county or municipality. Any county

or municipality that fails to provide the Department of Revenue with

information concerning ad valorem taxes levied by it adequate to permit a

timely determination of its appropriate share of tax proceeds collected under

this Article may be excluded by the Secretary from each monthly distribution

with respect to which the information was not provided in a timely manner,

and those tax proceeds shall then be distributed only to the remaining counties

or municipalities, as appropriate. For the purpose of computing the

distribution of the tax under this subsection to any county and the

municipalities located in the county for any month with respect to which the

property valuation of a public service company is the subject of an appeal and

the Department of Revenue is restrained by law from certifying the valuation

to the county and the municipalities in the county, the Department shall use

the last property valuation of the public service company that has been

certified.

The board of county commissioners in each taxing county shall, by resolution adopted during

the month of April of each year, determine which of the two foregoing methods of distribution

shall be in effect in the county during the next succeeding fiscal year. In order for the resolution

to be effective, a certified copy of it must be delivered to the Secretary in Raleigh within 15

calendar days after its adoption. If the board fails to adopt a resolution choosing a method of

distribution not then in effect in the county, or if a certified copy of the resolution is not timely

delivered to the Secretary, the method of distribution then in effect in the county shall continue

in effect for the following fiscal year. The method of distribution in effect on the first of July of

each fiscal year shall apply to every distribution made during that fiscal year.

(b1) Repealed by Session Laws 2008-134, s. 14(b), effective July 28, 2008.

(c) Municipality Defined. – As used in this Article, the term "municipality" means "city"

as defined in G.S. 153A-1.


(d) No municipality may receive any funds under this section if it was incorporated with

an effective date of on or after January 1, 2000, and is disqualified from receiving funds under

G.S. 136-41.2. No municipality may receive any funds under this section, incorporated with an

effective date on or after January 1, 2000, unless a majority of the mileage of its streets are open

to the public. The previous sentence becomes effective with respect to distribution of funds on or

after July 1, 1999. (1971, c. 77, s. 2; 1973, c. 476, s. 193; c. 752; 1979, c. 12, s. 1; 1979, 2nd

Sess., c. 1137, s. 49; 1981, c. 4, s. 2; 1985 (Reg. Sess., 1986), c. 934, s. 2; 1991, c. 325, s. 8;

1993, c. 485, s. 24; 1999-458, s. 6; 2001-427, s. 13(a); 2001-487, s. 118(b); 2002-72, s. 5;

2003-349, s. 5; 2004-203, s. 5(j); 2007-323, s. 31.16.3(d); 2008-134, s. 14(b).)

§ 105-473. Repeal of levy.

(a) The board of elections of any county, upon the written request of the board of county

commissioners thereof, or upon receipt of a petition signed by qualified voters of the county

equal in number to at least fifteen percent (15%) of the total number of votes cast in the county at

the last preceding election for the office of Governor, shall call a special election for the purpose

of submitting to the voters of the county the question of whether the levy of a one percent (1%)

sales and use tax theretofore levied should be repealed.

The special election shall be held under the same rules and regulations applicable to the

election of members of the General Assembly.

The county board of elections shall prepare ballots for the special election which shall

contain the words "FOR repeal of the one percent (1%) local sales and use tax levy," and the

words "AGAINST repeal of the one percent (1%) local sales and use tax levy," with appropriate

squares so that each voter may designate his vote by his cross (X) mark.

The county board of elections shall fix the date of the special election on a date permitted by

G.S. 163-287; provided, however, that the special election shall not be held within one year from

the date of the last preceding special election held under this section.

(b) In the event a majority of those voting in a special election held pursuant to this

section shall approve the repeal of the levy, the board of county commissioners shall, by

resolution, proceed to terminate the levy and the imposition of the tax in the taxing county unless

and until the tax is levied again as provided in G.S. 105-466(a).

(c) In addition, the board of county commissioners may, by resolution and without the

necessity of an election proceed to terminate the levy and the imposition of the tax in the taxing

county if the tax was levied under the provisions of G.S. 105-466(b).

(d) No termination of taxes levied and imposed under this Article shall be effective until

the end of the fiscal year in which the repeal election was held.

(e) The board of county commissioners, upon adoption of said resolution, shall cause a

certified copy of the resolution to be delivered immediately to the Secretary of Revenue,

accompanied by a certified statement from the county board of elections, if applicable, setting

forth the results of any special election approving the repeal of the tax in the county.

(f) No liability for any tax levied under this Article which shall have attached prior to the

effective date on which a levy is terminated shall be discharged as a result of such termination,

and no right to a refund of tax or otherwise, which shall have accrued prior to the effective date

on which a levy is terminated shall be denied as a result of such termination. (1971, c. 77, s. 2;

1973, c. 476, s. 193; 1981, c. 560, s. 2; 1995, c. 461, s. 17; 2013-381, s. 10.9.)

§ 105-474. Definitions; construction of Article; remedies and penalties.


The definitions set forth in G.S. 105-164.3 shall apply to this Article insofar as such

definitions are not inconsistent with the provisions of this Article, and all other provisions of

Article 5 and of Article 9 of Subchapter 1, Chapter 105 of the General Statutes, as the same

relate to the North Carolina Sales and Use Tax Act shall be applicable to this Article unless such

provisions are inconsistent with the provisions of this Article. The administrative interpretations

made by the Secretary of Revenue with respect to the North Carolina Sales and Use Tax Act, to

the extent not inconsistent with the provisions of this Article, may be uniformly applied in the

construction and interpretation of this Article. It is the intention of this Article that the provisions

of this Article and the provisions of the North Carolina Sales and Use Tax Act, insofar as

practicable, shall be harmonized.

The provisions with respect to remedies and penalties applicable to the North Carolina Sales

and Use Tax Act, as contained in Article 5 and Article 9, Subchapter 1, Chapter 105 of the

General Statutes, shall be applicable in like manner to the tax authorized to be levied and

collected under this Article, to the extent that the same are not inconsistent with the provisions

of this Article. (1971, c. 77, s. 2; 1973, c. 476, s. 193.)

§§ 105-475 through 105-479. Reserved for future codification purposes.

Article 40.

First One-Half Cent (1/2¢) Local Government Sales and Use Tax.


This Article shall be known as the First One-Half Cent (1/2¢) Local Government Sales and

Use Tax Act. (1983, c. 908, s. 1; 2002-123, s. 8(b).)


It is the purpose of this Article to afford the counties and cities of this State an opportunity to

obtain an added source of revenue with which to meet their growing financial needs, and to

reduce their reliance on other revenues, such as the property tax, by providing all counties of the

State that are subject to this Article with authority to levy one-half percent (1/2%) sales and use

taxes. (1983, c. 908, s. 1.)

§ 105-482. Limitations.

This Article applies only to counties that levy one percent (1%) sales and use taxes under

Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws. (1983, c. 908, s. 1;

1993, c. 485, s. 25.)

§ 105-483. Levy and collection of additional taxes.

Any county subject to this Article may levy one-half percent (1/2%) local sales and use taxes

in addition to any other State and local sales and use taxes levied pursuant to law. Except as

provided in this Article, the adoption, levy, collection, distribution, administration, and repeal of

these additional taxes shall be in accordance with Article 39 of this Chapter. In applying the

provisions of Article 39 of this Chapter to this Article, references to "this Article" mean Article

40 of this Chapter. The exemption for building materials in G.S. 105-468.1 does not apply to

taxes levied under this Article. (1983, c. 908, s. 1; 1993, c. 485, s. 26.)


§ 105-484. Form of ballot.

(a) The form of the question to be presented on a ballot for a special election concerning

the additional taxes authorized by this Article shall be: "FOR additional one-half percent (1/2%)

local sales and use taxes" or "AGAINST additional one-half percent (1/2%) local sales and use

taxes."

(b) The form of the question to be presented on a ballot for a special election concerning

the repeal of any additional taxes levied pursuant to this Article shall be: "FOR repeal of the

additional one-half percent (1/2%) local sales and use taxes" or "AGAINST repeal of the

additional one-half percent (1/2%) local sales and use taxes." (1983, c. 908, s. 1.)


§ 105-486. Distribution of additional taxes.

(a) County Allocation. – The Secretary shall, on a monthly basis, allocate the net

proceeds of the additional one-half percent (1/2%) sales and use taxes levied under this Article to

the taxing counties on a per capita basis according to the most recent annual population estimates

certified to the Secretary by the State Budget Officer.

(b) Adjustment. – The Secretary shall then adjust the amount allocated to each county

under subsection (a) by multiplying the amount by the appropriate adjustment factor set out in

the table below. If, after applying the adjustment factors, the resulting total of the amounts

allocated is greater or lesser than the net proceeds to be distributed, the amount allocated to each

county shall be proportionally adjusted to eliminate the excess or shortage.

County Adjustment Factor

Dare 1.49

Brunswick 1.17

Orange 1.15

Carteret and Durham 1.14

Avery 1.12

Moore 1.11

Transylvania 1.10

Chowan, McDowell, and Richmond 1.09

Pitt and New Hanover 1.07

Beaufort, Perquimans, Buncombe, and Watauga 1.06

Cabarrus, Jackson, and Surry 1.05

Alleghany, Bladen, Robeson, Washington, Craven, Henderson, 1.04

Onslow, and Vance

Gaston, Granville, and Martin 1.03

Alamance, Burke, Caldwell, Chatham, Duplin, Edgecombe, 1.02

Haywood, Swain, and Wilkes

Hertford, Union, Stokes, Yancey, Halifax, Rockingham, and 1.01

Cleveland

Alexander, Anson, Johnston, Northampton, Pasquotank, Person, 1.00

Polk, and Yadkin

Catawba, Harnett, Iredell, Pamlico, Pender, Randolph, Stanly, and 0.99

Tyrrell

Cherokee, Cumberland, Davidson, Graham, Hyde, Macon, 0.98


Rutherford, Scotland, and Wilson

Ashe, Bertie, Franklin, Hoke, Lincoln, Montgomery, and Warren 0.97

Wayne, Clay, Madison, Sampson, Wake, Lee, and Forsyth 0.96

Caswell, Gates, Mitchell, and Greene 0.95

Currituck and Guilford 0.94

Davie and Nash 0.93

Rowan and Camden 0.92

Jones 0.90

Mecklenburg 0.89

Lenoir 0.88

Columbus 0.81

(c) Distribution Between Counties and Cities. – The amount allocated to each taxing

county shall then be divided among the county and its municipalities in accordance with the

method by which the one percent (1%) sales and use taxes levied in that county pursuant to

Article 39 of this Chapter or Chapter 1096 of the 1967 Session Laws are distributed.

(d) No municipality may receive any funds under this section if it was incorporated with

an effective date of on or after January 1, 2000, and is disqualified from receiving funds under

G.S. 136-41.2. No municipality may receive any funds under this section, incorporated with an

effective date on or after January 1, 2000, unless a majority of the mileage of its streets are open

to the public. The previous sentence becomes effective with respect to distribution of funds on or

after July 1, 1999. (1983, c. 908, s. 1; 1985 (Reg. Sess., 1986), c. 906, s. 2; 1987, c. 832, s. 6;

1987 (Reg. Sess., 1988), c. 1082, s. 2; 1999-458, s. 7; 2001-427, s. 13(b), (c).)

§ 105-487. Use of additional tax revenue by counties.

(a) Except as provided in subsection (c), forty percent (40%) of the revenue received by a

county from additional one-half percent (1/2%) sales and use taxes levied under this Article

during the first five fiscal years in which the additional taxes are in effect in the county and thirty

percent (30%) of the revenue received by a county from these taxes after the first five fiscal

years in which the taxes are in effect in the county may be used by the county only for public

school capital outlay purposes as defined in G.S. 115C-426(f) or to retire any indebtedness

incurred by the county for these purposes.

(b) Repealed by Session Laws 1998-98, s. 31, effective August 14, 1998.

(c) The Local Government Commission may, upon petition by a county, authorize the

county to use part or all its tax revenue, otherwise required by subsection (a) of this section to be

used for public school capital needs, for any lawful purpose. The petition shall be in the form of

a resolution adopted by the Board of County Commissioners and transmitted to the Local

Government Commission. The petition shall demonstrate that the county can provide for its

public school capital needs without restricting the use of part or all of the designated amount of

the additional one-half percent (½%) sales and use tax revenue for that purpose.

In making its decision, the Local Government Commission shall consider information

contained in the petition concerning not only the public school capital needs, but also the other

capital needs of the petitioning county. The Commission may also consider information from

sources other than the petition. The Commission shall issue a written decision on each petition

stating the findings of the Commission concerning the public school capital needs of the

petitioning county and the percentage of revenue otherwise restricted by subsection (a) of this

section that may be used by the petitioning county for any lawful purpose.


Decisions of the Commission allowing counties to use a percentage of their tax revenue that

would otherwise be restricted under subsection (a) of this section for any lawful purpose are final

and shall continue in effect until the restrictions imposed by that subsection expire. A county

whose petition is denied, in whole or in part, by the Commission may subsequently submit a new

petition to the Commission.

(d) For purposes of determining the number of fiscal years in which one-half percent

(½%) sales and use taxes levied under this Article have been in effect in a county, these taxes are

considered to be in effect only from the effective date of the levy of these taxes and are

considered to be in effect for a full fiscal year during the first year in which these taxes were in

effect, regardless of the number of months in that year in which the taxes were actually in effect.

(e) A county may expend part or all of the revenue restricted for public school capital

needs pursuant to subsection (a) of this section in the fiscal year in which the revenue is received,

or the county may place part or all of this revenue in a capital reserve fund and shall specifically

identify this revenue in accordance with Chapter 159 of the General Statutes. (1983, c. 908, s. 1;

1993, c. 255, ss. 1, 3; 1998-98, s. 31; 1998-186, s. 1; 2009-395, s. 1.)

Article 41.

Alternative Local Government Sales and Use Taxes.


Article 42.

Second One-Half Cent (1/2¢) Local Government Sales and Use Tax.


This Article shall be known as the Second One-Half Cent (1/2¢) Local Government Sales

and Use Tax Act. (1985 (Reg. Sess., 1986), c. 906, s. 1; 2002-123, s. 9(b).)


It is the purpose of this Article to afford the counties and cities of this State an opportunity to

obtain an added source of revenue with which to meet their growing financial needs, and to

reduce their reliance on other revenues, such as the property tax and federal revenue sharing, by

providing all counties of the State that are subject to this Article with authority to levy one-half

percent (1/2%) sales and use taxes. (1985 (Reg. Sess., 1986), c. 906, s. 1.)


This Article applies only to counties that levy one percent (1%) sales and use taxes under

Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws and also levy

one-half percent (1/2%) local sales and use taxes under Article 40 of this Chapter. (1985 (Reg.

Sess., 1986), c. 906, s. 1.)

§ 105-498. Levy and collection of additional taxes.

Any county subject to this Article may levy one-half percent (1/2%) local sales and use taxes

in addition to any other State and local sales and use taxes levied pursuant to law. Except as

provided in this Article, the adoption, levy, collection, distribution, administration, and repeal of


these additional taxes shall be in accordance with Article 39 of this Chapter. In applying the

provisions of Article 39 of this Chapter to this Article, references to "this Article" mean Article

42 of this Chapter. The exemption for building materials in G.S. 105-468.1 does not apply to

taxes levied under this Article. (1985 (Reg. Sess., 1986), c. 906, s. 1; 1993, c. 485, s. 27.)

§ 105-499. Form of ballot.

(a) The form of the question to be presented on a ballot for a special election concerning

the additional taxes authorized by this Article shall be: "FOR one-half percent (1/2%) local sales

and use taxes in addition to the current one and one-half percent (1 1/2%) local sales and use

taxes" or "AGAINST one-half percent (1/2%) local sales and use taxes in addition to the current

one and one-half percent (1 1/2%) local sales and use taxes."

(b) The form of the question to be presented on a ballot for a special election concerning

the repeal of any additional taxes levied pursuant to this Article shall be: "FOR repeal of the

additional one-half percent (1/2%) local sales and use taxes, thus reducing local sales and use

taxes to one and one-half percent (1 1/2%)" or "AGAINST repeal of the additional one-half

percent (1/2%) local sales and use taxes, thus reducing local sales and use taxes to one and

one-half percent (1 1/2%)." (1985 (Reg. Sess., 1986), c. 906, s. 1.)


§ 105-501. Distribution of additional taxes.

(a) Method. – The Secretary must, on a monthly basis, allocate to each taxing county the

net proceeds of the additional one-half percent (1/2%) sales and use taxes collected in that

county under this Article. If the Secretary collects taxes under this Article in a month and the

taxes cannot be identified as being attributable to a particular taxing county, the Secretary must

allocate the net proceeds of these taxes among the taxing counties in proportion to the amount of

taxes collected in each county under this Article in that month.

The Secretary must divide and distribute the funds allocated to a taxing county each month

under this section between the county and the municipalities located in the county in accordance

with the method by which the one percent (1%) sales and use taxes levied in that county pursuant

to Article 39 of this Chapter or Chapter 1096 of the 1967 Session Laws are distributed. No

municipality may receive any funds under this section if it was incorporated with an effective

date of on or after January 1, 2000, and is disqualified from receiving funds under G.S. 136-41.2.

No municipality may receive any funds under this section, incorporated with an effective date on

or after January 1, 2000, unless a majority of the mileage of its streets are open to the public.

(b) Deductions. – The costs incurred by the State to provide the functions listed in this

subsection that support local governments are deductible from the collections to be allocated

each month for distribution.

(1) The Department's cost of the following for the preceding month must be

deducted and credited to the Department:

a. The Local Government Division.

b. The Property Tax Commission.

(1a) The Department of State Treasurer's costs for personnel and operations of the

Local Government Commission.

(2) One-twelfth of the costs of the following for the preceding fiscal year must be

deducted and credited to the General Fund:


a. The School of Government at the University of North Carolina at

Chapel Hill in operating a training program in property tax appraisal

and assessment.

b. Repealed by Session Laws 2013-183, s. 2.3(b), effective July 1, 2014.

c. Seventy percent (70%) of the expenses of the Department of Revenue

in performing the duties imposed by Article 2D of this Chapter. (1985

(Reg. Sess., 1986), c. 906, s. 1; 1987, c. 832, s. 8; 1987 (Reg. Sess.,

1988), c. 1082, s. 4; 1995, c. 41, s. 4; c. 370, s. 1; 1999-458, s. 9;

2001-427, s. 13(d); 2002-126, s. 30D(a); 2006-264, s. 29(f); 2007-323,

s. 31.16.4(b); 2010-31, s. 26.1(a); 2011-145, s. 27.1(a), (b).)

§ 105-502. Use of additional tax revenue by counties.

(a) Restriction. - The county must use sixty percent (60%) of the amount of revenue

specified in this subsection for public school capital outlay purposes as defined in G.S. 115C-

426(f) or to retire any indebtedness incurred by the county for these purposes during the period

beginning five years prior to the date the taxes took effect:

(1) The amount of revenue the county receives under this Article.

(2) If the amount allocated to the county under G.S. 105-486 is greater than the

amount allocated to the county under G.S. 105-501(a), the difference between

the two amounts.

(b) Exception. - The Local Government Commission may, upon petition by a county,

authorize a county to use part or all of the revenue, otherwise required by subsection (a) to be

used for public school capital outlay purposes, for any lawful purpose. The petition must be in

the form of a resolution adopted by the Board of County Commissioners and transmitted to the

Local Government Commission. The petition must demonstrate that the county can provide for

its public school capital needs without restricting the use of part or all of the specified revenue

for these purposes.

In making its decision, the Local Government Commission must consider information in the

petition concerning not only the public school capital needs but also the other capital needs of the

petitioning county. The Commission may consider information from sources other than the

petition. The Commission must issue a written decision on each petition stating the findings of

the Commission concerning the public school capital needs of the petitioning county and the

percentage of revenue otherwise restricted by subsection (a) that may be used by the petitioning

county for any lawful purpose.

Decisions of the Commission allowing counties to use a percentage of the revenue that would

otherwise be restricted under subsection (a) for any lawful purpose are final and continue in

effect until the restrictions expire. A county whose petition is denied, in whole or in part, by the

Commission may subsequently submit a new petition to the Commission.

(c) Reserve Fund. - A county may expend part or all of the revenue restricted for public

school capital needs pursuant to subsection (a) in the fiscal year in which the revenue is received,

or the county may place part or all of this revenue in a capital reserve fund. A county must

specifically identify revenue placed in a reserve fund in accordance with Chapter 159 of the

General Statutes.

(d) Taxes in Effect. - For purposes of this section in determining the number of fiscal

years in which one-half percent (1/2%) sales and use taxes levied under this Article have been in

effect in a county, these taxes are considered to be in effect only from the effective date of the


levy of these taxes and are considered to be in effect for a full fiscal year during the first year in

which these taxes were in effect, regardless of the number of months in that year in which the

taxes were actually in effect. (1985 (Reg. Sess., 1986), c. 906, s. 1; 1987, c. 622, s. 11; 1993, c.

255, ss. 2, 4; 1998-186, s. 2; 2008-134, s. 13(a); 2009-395, s. 2.)

§ 105-503: Recodified as § 115C-440.1 by Session Laws 1995 (Regular Session, 1996), c.

666, s. 4.


§ 105-505. Reserved for future codification purposes.

Article 43.

Local Government Sales and Use Taxes for Public Transportation.

Part 1. General.

§ 105-506. Short title; purpose.

This Article is the Local Government Public Transportation Sales Tax Act and may be cited

by that name. This Article gives the counties and transportation authorities of this State an

opportunity to obtain an additional source of revenue with which to meet their needs for

financing local public transportation systems. It provides them with authority to levy sales and

use taxes. All such taxes must be approved in a referendum. (1997-417, s. 1; 2009-527, s. 2(a),

(b).)


The definitions in G.S. 105-164.3 and the following definitions apply in this Article:

(1) Board of trustees. – The governing body of a transportation authority.

(2) Net proceeds. – Gross proceeds less the cost of administering and collecting

the tax.

(3) Public transportation system. – Any combination of real and personal property

established for purposes of public transportation. The systems may include

one or more of the following: structures, improvements, buildings, equipment,

vehicle parking or passenger transfer facilities, railroads and railroad

rights-of-way, rights-of-way, bus services, shared-ride services,

high-occupancy vehicle facilities, car-pool and vanpool programs, voucher

programs, telecommunications and information systems, integrated fare

systems, and the interconnected bicycle and pedestrian infrastructure that

supports public transportation, bus lanes, and busways. The term does not

include, however, streets, roads, or highways except to the extent they are

dedicated to public transportation vehicles or to the extent they are necessary

for access to vehicle parking or passenger transfer facilities.

(4) Transportation authority. – For the purposes of Parts 3 and 4 of this Article, a

regional public transportation authority created pursuant to Article 26 of

Chapter 160A of the General Statutes; and for the purposes of Parts 3 and 5 of

this Article, a regional transportation authority created pursuant to Article 27


of Chapter 160A of the General Statutes. (1997-417, s. 1; 2009-527, s. 2(a),

(b).)

§ 105-506.2. Exemption of food.

A tax levied under this Article does not apply to the sales price of food that is exempt from

tax pursuant to G.S. 105-164.13B or to the sales price of a bundled transaction taxable pursuant

to G.S. 105-467(a)(5a). (1997-417, s. 1; 2008-134, s. 74(a); 2009-527, s. 2(a), (b).)

Part 2. Mecklenburg County.


A county may not levy a tax under this Part unless the county or at least one unit of local

government in the county operates a public transportation system. In addition, a county may not

levy a tax under this Part unless it has developed a financial plan and distributed it to each unit of

local government in the county that operates a local public transportation system. The financial

plan must provide for equitable allocation of the net proceeds distributed to the county in

consideration of the identified needs of local public transportation systems in the county,

countywide human service transportation systems, and expansion of public transportation service

to unserved areas in the county. (1997-417, s. 1; 2009-527, s. 2(a), (b).)

§ 105-507.1. Local election on adoption of sales and use tax.

(a) Resolution. – The board of commissioners of a county may direct the county board of

elections to conduct an advisory referendum within the county on the question of whether a local

sales and use tax at the rate of one-half percent (1/2%) may be levied in accordance with this

Part. The election shall be held in accordance with the procedures of G.S. 163-287. The board of

commissioners shall hold a public hearing on the question at least 30 days before the date the

election is to be held.

(b) Ballot Question. – The form of the question to be presented on a ballot for a special

election concerning the levy of a tax authorized by this Article shall be:

"[ ] FOR [ ] AGAINST

One-half percent (1/2%) local sales and use taxes, in addition to the current local sales and use

taxes, to be used only for public transportation systems." (1997-417, s. 1; 2009-527, s. 2(a), (b);

2013-381, s. 10.10.)

§ 105-507.2. Levy and collection of sales and use tax.

If the majority of those voting in a referendum held pursuant to G.S. 105-507.1 vote for the

levy of the tax, the board of commissioners of the county may, by resolution, levy one-half

percent (½%) local sales and use taxes in addition to any other State and local sales and use taxes

levied pursuant to law. Except as provided in this Part, the adoption, levy, collection,

administration, and repeal of these additional taxes shall be in accordance with Article 39 of this

Chapter. In applying the provisions of Article 39 of this Chapter to this Part, references to "this

Article" mean "Part 1 of Article 43 of Chapter 105 of the General Statutes". (1997-417, s. 1;

2008-134, s. 74(b); 2009-527, s. 2(a), (b).)

§ 105-507.3. Distribution and use of taxes.

(a) Distribution. – The Secretary shall, on a monthly basis, allocate to each taxing county

the net proceeds of the tax levied under this Part by that county. If the Secretary collects taxes


under this Part in a month and the taxes cannot be identified as being attributable to a particular

taxing county, the Secretary shall allocate these taxes among the taxing counties, in proportion to

the amount of taxes collected in each county under this Part in that month and shall include them

in the monthly distribution.

The Secretary shall distribute the net proceeds of the tax levied by a county on a per capita

basis among the county and the units of local government in the county that operate public

transportation systems. No proceeds shall be distributed to a county that does not operate a

public transportation system or to a unit of local government that does not operate a public

transportation system.

(b) Use. – A county must allocate the net proceeds distributed to it in accordance with its

financial plan adopted pursuant to G.S. 105-507 and use the net proceeds only for financing,

constructing, operating, and maintaining local public transportation systems. Any other unit of

local government may use the net proceeds distributed to it under this Part only for financing,

constructing, operating, and maintaining local public transportation systems. Every unit of

government shall use the net proceeds to supplement and not to supplant or replace existing

funds or other resources for public transportation systems. (1997-417, s. 1; 2001-427, s. 13(f);

2009-527, s. 2(a), (b).)

§ 105-507.4. Applicability.

This Part applies only to Mecklenburg County. (1997-417, s. 1; 2009-527, s. 2(a), (b).)

Part 3. Transportation Authorities.

§ 105-508. Special districts.

(a) Authority. – A transportation authority may create a special district as provided in

Parts 4 and 5 of this Article. A special district is subject to the provisions of this Part as well as

the Part under which it was created. A special district created under this Article is a local

government body corporate and politic and has the power to carry out the purposes of the Part

under which it is established.

(b) Governance. – The following entity shall serve ex officio as the governing board and

be responsible for budget adoption and the operation and management of the transit services

provided by the district:

(1) The board of trustees of the transportation authority, if the special district

consists of multiple counties. If the special district is expanded under G.S.

105-509(d) or G.S. 105-510(d) to include more than one county, then the

board of trustees of the transportation authority shall become the governing

board of the district beginning on the first day of the next fiscal year after

expansion of the district.

(2) The county board of commissioners, if the special district consists of one

county. The board may contract with the transportation authority as needed.

(c) Filing Requirement. – The transportation authority creating a special district shall

name it and file with the Secretary of State the documents creating the district, and shall also file

notice of the addition to and removal from the district of any counties, or of the abolition of the

special district. (2009-527, s. 2(b).)

§ 105-508.1. Limitations.

A transportation authority may not levy a tax under Part 4 or 5 of this Article unless:


(1) It operates a public transportation system.

(2) It has developed a financial plan and distributed it to each unit of local

government located within its territorial jurisdiction. The plan must be

approved by the board of commissioners of each county in the district prior to

the levy of the tax. If the board of commissioners of a county in a multicounty

district does not adopt the plan, the transportation authority may remove that

county from the district, and no tax may be levied in that county under this

Part. The financial plan must provide for equitable use of the net proceeds

within or to benefit the special district created under Part 4 or Part 5 of this

Article and consider (i) the identified needs of local public transportation

systems in the district, (ii) human service transportation systems within the

district, and (iii) expansion of public transportation systems to underserved

areas of the district. The financial plan must also be approved by all

Metropolitan Planning Organizations under Article 16 of Chapter 136 of the

General Statutes whose jurisdiction includes any of the area of the special

district. The plan may be revised from time to time. An interlocal agreement

between the transportation authority and all the counties in the special district

may require periodic review and approval of the financial plan.

(3) The tax is approved by the voters. (2009-527, s. 2(b).)


(a) Distribution. – The Secretary shall, on a monthly basis, allocate to each special

district the net proceeds of the tax levied under this Part within the special tax district, to be used

for the benefit of that district.

(b) Use. – A special district must expend the net proceeds distributed to it in accordance

with its financial plan adopted pursuant to G.S. 105-508.1 and use the net proceeds only for

financing, constructing, operating, and maintaining public transportation systems. The special

district shall use the net proceeds to supplement and not to supplant or replace existing funds or

other resources for public transportation systems. (2009-527, s. 2(b).)

Part 4. Regional Public Transportation Authority (Triangle).

§ 105-509. Local election on adoption of sales and use tax – regional public transportation

authority.

(a) Special District. – A regional public transportation authority may create a special

district that consists of the entire area of one or more counties within its territorial jurisdiction

and may levy on behalf of the special district the tax authorized in this section. The proceeds of a

tax levied under this section may be used only for the benefit of the special district and only for

the purposes provided in this Article. If a referendum in a district fails in all the counties in the

district, the transportation authority may abolish the special district.

(b) Resolution. – The board of trustees of the regional public transportation authority

may, if all of the conditions listed in this subsection have been met, direct the respective county

board or boards of elections to conduct an advisory referendum within the special district on the

question of whether a local sales and use tax at the rate of one-half percent (1/2%) may be levied

within the district in accordance with this Part. The tax may not be levied without voter approval.

The election shall be held on a date jointly agreed upon by the authority, the county board or

boards of commissioners, and the county board or boards of elections and shall be held on a date


permitted by and in accordance with the procedures of G.S. 163-287. The conditions are as

follows:

(1) The board of trustees has obtained approval to conduct a referendum by a vote

of the following:

a. A majority vote of each of the county boards of commissioners within

the special district, if it is a multicounty special district.

b. A majority of the county board of commissioners within the special

district, if it is a single-county special district.

(2) A public hearing is held on the question by the board or boards of

commissioners at least 30 days before the date the election is to be held.

(c) Ballot Question. – The form of the question to be presented on a ballot for a special



One-half percent (1/2%) local sales and use taxes, in addition to the current local sales and

use taxes, to be used only for public transportation systems."

(d) Expansion. – If a special district created under this Part does not include all the

counties in the territorial jurisdiction of a transportation authority, it may be expanded to include

an additional whole county or counties by joint action of the board of trustees of the

transportation authority and the board of commissioners of the county or boards of

commissioners of the counties to be added, with the approval of the voters in the county or

counties to be added. The procedure for expansion of a district is the same as for the initial

creation of the district, but the referendum shall be held separately within each of the counties to

be added. (2009-527, s. 2(b); 2013-381, s. 10.11.)

§ 105-509.1. Levy and collection of sales and use tax – regional public transportation

authority.

If the majority of those voting in a referendum held pursuant to G.S. 105-509 vote for the

levy of the tax, the transportation authority may, by resolution, levy one-half percent (½%) local

sales and use taxes within the special district, in addition to any other State and local sales and

use taxes levied pursuant to law. In determining the results of the election in a multicounty

district, all the counties of the district shall be considered to be one unit but also must receive a

majority vote in each county, except that if the referendum is passed in one or more but not all of

the counties, the counties in which the referendum was not approved are removed from the

special district upon certification of the election result and the county or counties that approved

the referendum shall remain in the special district. Except as provided in this Part, the adoption,

levy, collection, administration, and repeal of these additional taxes shall be in accordance with

Article 39 of this Chapter. In applying the provisions of Article 39 of this Chapter to this Article,

references to "this Article" mean "Part 4 of Article 43 of Chapter 105 of the General Statutes."

Any repeal of the tax shall be done by the same procedure as its enactment under this section,

and in a multicounty district a petition for repeal under G.S. 105-473 shall be judged by the total

votes in all the counties in the district. (2009-527, s. 2(b).)

Part 5. Regional Transportation Authority (Triad).

§ 105-510. Local election on adoption of sales and use tax – regional transportation

authority.


(a) Special District. – A regional transportation authority may create a special district that

consists of the entire area of one or two counties within its territorial jurisdiction and may levy

on behalf of the special district the tax authorized in this section. The special district may not

include counties other than Forsyth and Guilford. The proceeds of a tax levied under this section

may be used only for the benefit of the special district and only for the purposes provided in this

Article. If a referendum in a district fails, the transportation authority may abolish the special

district.

(b) Resolution. – The board of trustees of the regional transportation authority may, if all

of the conditions listed in this subsection have been met, direct the respective county board or

boards of elections to conduct an advisory referendum within the special district on the question

of whether a local sales and use tax at the rate of one-half percent (1/2%) may be levied within

the district in accordance with this Part. The tax may not be levied without voter approval. The

election shall be held on a date jointly agreed upon by the authority, the county board or boards

of commissioners, and the county board or boards of elections and shall be held on a date

permitted by and in accordance with the procedures of G.S. 163-287. The conditions are as

follows:

(1) The board of trustees has obtained approval to conduct a referendum by a vote

of the following:

a. A majority vote of both of the county boards of commissioners within

the special district, if it is a multicounty special district.

b. A majority of the county board of commissioners within the special

district, if it is a single-county special district.

(2) A public hearing is held on the question by the board or boards of

commissioners at least 30 days before the date the election is to be held.




One-half percent (1/2%) local sales and use taxes, in addition to the current local sales and

use taxes, to be used only for public transportation systems."

(d) Expansion. – If a special district created under this Part does not include both of the

eligible counties under subsection (a) of this section, it may be expanded to include the other

county by joint action of the board of trustees of the transportation authority and the board of

commissioners of the county to be added, with the approval of the voters in the county to be

added. The procedure for expansion of the district is the same as for the initial creation of the

district, but the referendum shall be held separately in the county to be added. (2009-527, s.

2(b); 2013-381, s. 10.12.)

§ 105-510.1. Levy and collection of sales and use tax – regional transportation authority.

If the majority of those voting in a referendum held pursuant to G.S. 105-510 vote for the

levy of the tax, the transportation authority may, by resolution, levy one-half percent (1/2%)

local sales and use taxes within the special district, in addition to any other State and local sales

and use taxes levied pursuant to law. In determining the results of the election in a multicounty

district, all the counties of the district shall be considered to be one unit but also must receive a

majority vote in each county, except that if the referendum is passed in one but not both of the

counties, the county in which the referendum was not approved is removed from the special

district upon certification of the election result and the county that approved the referendum shall


remain in the special district. Except as provided in this Part, the adoption, levy, collection,

administration, and repeal of these additional taxes shall be in accordance with Article 39 of this

Chapter. In applying the provisions of Article 39 of this Chapter to this Article, references to

"this Article" mean "Part 5 of Article 43 of Chapter 105 of the General Statutes." Any repeal of

the tax shall be done by the same procedure as its enactment under this section, and in a

multicounty district a petition for repeal under G.S. 105-473 shall be judged by the total votes in

all the counties in the district. (2009-527, s. 2(b).)

Part 6. Other Counties.

§ 105-511. Applicability.

This Part applies only in counties other than Durham, Forsyth, Guilford, Mecklenburg,

Orange, or Wake. (2009-527, s. 2(b).)

§ 105-511.1. Limitations.

A county may not levy a tax under this Part unless the county or at least one unit of local

government in the county operates a public transportation system. As used in this Part, operation

of a public transportation system includes a contract or interlocal agreement for operation of the

public transportation system by another county or municipality, or by a transportation authority

created under (i) a municipal charter; or (ii) Article 25, 26, or 27 of Chapter 160A of the General

Statutes. As used in this Part, operation of a public transportation system also includes a contract

with a private entity for operation of the public transportation system. (2009-527, s. 2(b).)

§ 105-511.2. Local election on adoption of sales and use tax.

(a) Resolution. – The board of commissioners of a county may direct the county board of

elections to conduct an advisory referendum within the county on the question of whether a local

sales and use tax at the rate of one-quarter percent (1/4%) may be levied in accordance with this

Part. The election shall be held on a date jointly agreed upon by the boards and shall be held on a

date permitted by and in accordance with the procedures of G.S. 163-287. The board of

commissioners shall hold a public hearing on the question at least 30 days before the date the

election is to be held.

(b) Ballot Question. – The form of the question to be presented on a ballot for a special



One-quarter percent (1/4%) local sales and use taxes, in addition to the current local sales and

use taxes, to be used only for public transportation systems." (2009-527, s. 2(b); 2013-381, s.

10.13.)

§ 105-511.3. Levy and collection of sales and use tax.

If the majority of those voting in a referendum held pursuant to this Part vote for the levy of

the tax, the board of commissioners of the county may, by resolution, levy one-quarter percent

(1/4%) local sales and use taxes in addition to any other State and local sales and use taxes levied

pursuant to law. Except as provided in this Part, the adoption, levy, collection, administration,

and repeal of these additional taxes shall be in accordance with Article 39 of this Chapter. In

applying the provisions of Article 39 of this Chapter to this Part, references to "this Article"

mean "Part 6 of Article 43 of Chapter 105 of the General Statutes." (2009-527, s. 2(b).)



(a) Distribution. – The Secretary shall, on a monthly basis, allocate to each taxing county

the net proceeds of the tax levied under this Part by that county. If the Secretary collects taxes

under this Part in a month and the taxes cannot be identified as being attributable to a particular

taxing county, the Secretary shall allocate these taxes among the taxing counties, in proportion to

the amount of taxes collected in each county under this Part in that month and shall include them

in the monthly distribution.

The Secretary shall distribute the net proceeds of the tax levied by a county on a per capita

basis among the county and the units of local government in the county that operate a public

transportation system as follows:

(1) To the county based on the population of the county that is not in an

incorporated area, and to the municipalities within the county based on the

population of that municipality that is located within that county. To

determine the population of each county and each municipality, the Secretary

shall use the most recent annual estimate of population certified by the State

Budget Officer.

(2) Notwithstanding subdivision (1) of this subsection, if a municipality to which

funds are to be allocated neither operates nor contracts for the operation of a

public transportation system, the population of that municipality shall be

excluded from the calculations of subdivision (1) of this subsection.

(3) Notwithstanding subdivision (1) of this subsection, if a county to which funds

are to be allocated neither operates nor contracts for the operation of a public

transportation system, the population of that county not in an incorporated

area shall be excluded from the calculations of subdivision (1) of this

subsection.

If a county or a municipality that does not receive an allocation of funds on account of

subdivision (2) or (3) of this subsection begins to operate or contract for the operation of a public

transportation system, that county or municipality shall begin receiving funds beginning the first

day of July that is more than 30 days thereafter.

(b) A county or municipality may use funds received under this Part only for financing,

constructing, operating, and maintaining public transportation systems. Every unit of government

shall use funds to supplement and not to supplant or replace existing funds or other resources for

public transportation systems. (2009-527, s. 2(b).)




Article 44.

Local Government Hold Harmless and Allocation Provisions.

§ 105-515 through 105-520: Repealed by Session Laws 2007-323, s. 31.16.4(a), effective

October 1, 2009, and applicable to sales occurring on or after that date.


§§ 105-515 through 105-520: Repealed by Session Laws 2007-323, s. 31.16.4(a), effective


§ 105-515 through 105-520: Repealed by Session Laws 2007-323, s. 31.16.4(a), effective


§ 105-521. Transitional local government hold harmless for repealed reimbursements.


(1) Local government. – A county or municipality that received a distribution of

local sales taxes in the most recent fiscal year for which a local sales tax share

has been calculated.

(2) Local sales tax share. – A local government's percentage share of the two-cent

(2¢) sales taxes distributed during the most recent fiscal year for which data

are available.

(3) Repealed reimbursement amount. – The total amount a local government

would have been entitled to receive during the 2002-2003 fiscal year under

G.S. 105-164.44C, 105-275.1, 105-275.2, 105-277.001, and 105-277.1A, if

the Governor had not withheld any distributions under those sections.

(3a) Replacement revenue. – The sum of the following:

a. Fifty percent (50%) of the amount of sales and use tax revenue

distributed under Article 40 of this Chapter, other than revenue from

the sale of food that is subject to local tax but is exempt from State tax

under G.S. 105-164.13B.

b. Twenty-five percent (25%) of the amount of sales and use tax revenue

distributed under Article 39 of this Chapter or under Chapter 1096 of

the 1967 Session Laws, other than revenue from the sale of food that is

subject to local tax but is exempt from State tax under G.S.

105-164.13B.

(4) Two-cent (2¢) sales taxes. – The first one-cent (1¢) sales and use tax

authorized in Article 39 of this Chapter and in Chapter 1096 of the 1967

Session Laws, the first one-half cent (1/2¢) local sales and use tax authorized

in Article 40 of this Chapter, and the second one-half cent (1/2¢) local sales

and use tax authorized in Article 42 of this Chapter.

(b) Distributions. – On or before September 15, 2013, the Secretary must multiply each

local government's local sales tax share by the estimated amount of replacement revenue that all

local governments are expected to receive during the current fiscal year. If the resulting amount

is less than one hundred percent (100%) of the local government's repealed reimbursement

amount, the Secretary must pay the local government fifty percent (50%) of the difference, but

not less than fifty dollars ($50.00).

On or before August 15, 2013, the Department of Revenue and the Fiscal Research Division

of the General Assembly must each submit to the Secretary and to the General Assembly a final

projection of the estimated amount of replacement revenue that all local governments would be

expected to receive during the upcoming fiscal year. If, after May 1 and before a distribution is

made, a law is enacted that would affect the projection, an updated projection must be submitted

as soon as practicable. If the Secretary does not use the lower of the two final projections to

make the calculation required by this subsection, the Secretary must report the reasons for this


decision to the Joint Legislative Commission on Governmental Operations within 60 days after

receiving the projections.

(c) Source of Funds. – The Secretary must draw the funds distributed under this section

from sales and use tax collections under Article 5 of this Chapter.

(d) Reports. – The Secretary must report to the Revenue Laws Study Committee by

January 31, 2014, the amount distributed under this section for the current fiscal year.

(2001-424, s. 34.14(a); 2003-284, s. 37.1; 2003-349, s. 6; 2004-124, s. 6.3; 2007-323, s.

31.16.3(c); 2013-360, s. 6.17.)

§ 105-522. City hold harmless for repealed local taxes.


(1) Eligible municipality. – A municipality that was incorporated on or before

October 1, 2008, and receives a distribution of sales and use taxes under G.S.

105-472.

(2) (Effective until July 1, 2016) Hold harmless amount. – The sum of the

following amounts allocated for distribution to a municipality for a month:

a. The amount of sales and use tax revenue allocated under G.S. 105-486.

This calculation determines the effect of repealing a one-half percent

(1/2%) sales and use tax distributed on a per capita basis.

b. An amount determined by subtracting twenty-five percent (25%) of

the amount of sales and use tax revenue allocated under G.S. 105-472

or Chapter 1096 of the 1967 Session Laws from fifty percent (50%) of

the amount of sales and use tax revenue allocated under G.S. 105-486.

This calculation determines the effect of distributing a one-quarter

percent (.25%) tax on the basis of point of origin instead of on a per

capita basis.

(2) (Effective July 1, 2016) Hold harmless amount. – The sum of the following

amounts allocated for distribution to a municipality for a month. The

references in this subdivision to Article 39 of this Chapter and Chapter 1096

of the 1967 Session Laws and Articles 40 and 42 of this Chapter do not

include the adjustment made pursuant to G.S. 105-524. The amounts are as

follows:










capita basis.

(b) Requirement. – A county is required to hold the eligible municipalities in the county

harmless from the repeal of the local sales and use taxes formerly imposed under this Article.

The Secretary must add an eligible municipality's hold harmless amount to the amount

distributed to the municipality under this Subchapter. To obtain the revenue for the hold


harmless distribution, the Secretary must reduce each county's monthly allocation under G.S.

105-472(b) or under Chapter 1096 of the 1967 Session Laws by the hold harmless amounts for

the municipalities in that county. (2007-323, ss. 31.16.3(f), 31.16.4(c); 2007-345, s. 14.4(a);

2008-134, ss. 14(a), 15(c), (f), (g); 2015-268, s. 10.1(e3).)

§ 105-523. County hold harmless for repealed local taxes.

(a) (Effective until July 1, 2016) Intent. – It is the intent of the General Assembly that

each county benefit by at least two hundred fifty thousand dollars ($250,000) annually from the

exchange of a portion of the local sales and use taxes for the State's agreement to assume the

responsibility for the non-administrative costs of Medicaid.

(a) (Effective July 1, 2016 until July 1, 2017) Intent. – It is the intent of the General

Assembly that each county benefit by at least one hundred twenty-five thousand dollars

($125,000) annually from the exchange of a portion of the local sales and use taxes for the State's

agreement to assume the responsibility for the non-administrative costs of Medicaid.

(a) (Effective July 1, 2017) Intent. – It is the intent of the General Assembly that each

county be held harmless from the exchange of a portion of the local sales and use taxes for the

State's agreement to assume the responsibility for the non-administrative costs of Medicaid.


(1) City hold harmless amount. – The hold harmless amount determined under

G.S. 105-522 for the eligible municipalities in a county.

(2) (Effective until July 1, 2016) Hold harmless threshold. – The amount of a

county's Medicaid service costs and Medicare Part D clawback payments

assumed by the State under G.S. 108A-54 for the fiscal year, less two hundred

fifty thousand dollars ($250,000). A county's Medicaid service costs for fiscal

years 2008-2009, 2009-2010, and 2010-2011 are determined without regard to

the changes made to the Federal Medical Assistance Percentage by section

5001 of the American Recovery and Reinvestment Act of 2009.

(2) (Effective July 1, 2016 until July 1, 2017) Hold harmless threshold. – The

amount of a county's Medicaid service costs and Medicare Part D clawback

payments assumed by the State under G.S. 108A-54 for the fiscal year, less

one hundred twenty-five thousand dollars ($125,000). A county's Medicaid

service costs for fiscal years 2008-2009, 2009-2010, and 2010-2011 are

determined without regard to the changes made to the Federal Medical

Assistance Percentage by section 5001 of the American Recovery and

Reinvestment Act of 2009.

(2) (Effective July 1, 2017) Hold harmless threshold. – The amount of a county's

Medicaid service costs and Medicare Part D clawback payments assumed by

the State under G.S. 108A-54 for the fiscal year. A county's Medicaid service

costs for fiscal years 2008-2009, 2009-2010, and 2010-2011 are determined

without regard to the changes made to the Federal Medical Assistance

Percentage by section 5001 of the American Recovery and Reinvestment Act

of 2009.

(3) (Effective until July 1, 2016) Repealed sales tax amount. – The sum of the

following amounts allocated for distribution to a county for a month:











capita basis.

(3) (Effective July 1, 2016) Repealed sales tax amount. – The sum of the

following amounts allocated for distribution to a county for a month. The

references in this subdivision to Article 39 of this Chapter and Chapter 1096

of the 1967 Session Laws and Articles 40 and 42 of this Chapter do not

include the adjustment made pursuant to G.S. 105-524. The amounts are as

follows:










capita basis.

(c) Requirement. – If a county's repealed sales tax amount plus its city hold harmless

amount for a fiscal year exceeds the county's hold harmless threshold for that fiscal year, the

State is required to hold the county harmless for the difference by paying the amount of the

difference to the county. The Secretary must withhold from sales and use tax collections under

Article 5 of this Chapter the amount needed to make the county hold harmless payments required

by this section.

(d) Method. – The Secretary must estimate a county's repealed sales tax amount, city

hold harmless amount, and hold harmless threshold for a fiscal year to determine if the county is

eligible for a hold harmless payment. The Secretary must send to an eligible county with the

distribution made under G.S. 105-472 for March of that year an amount equal to ninety percent

(90%) of its estimated hold harmless payment. At the end of each fiscal year, the Secretary must

determine each county's hold harmless payment for that year. The Secretary must send by

August 15 the remainder of the county's hold harmless payment for the fiscal year that ended on

June 30. The Secretary of the Department of Health and Human Services must give the Secretary

of Revenue the data needed to determine a county's hold harmless threshold by February 24th of

each year, and the data needed for the final calculation of each county's hold harmless threshold

by July 24th of each year. (2007-323, s. 31.16.4(d); 2007-345, s. 14.4(b); 2008-134, s. 15(a), (d),

(f), (h); 2009-399, s. 4(a); 2010-95, s. 14; 2014-100, ss. 37.2(a)-(d); 2015-268, s. 10.1(e4).)

§§ 105-524 through 105-534: Reserved for future codification purposes.


§ 105-524. (Effective July 1, 2016 – see note) Distribution of additional sales tax revenue

for economic development, public education, and community colleges.

(a) Purpose. – The purpose of this section is to address sales tax leakage that results from

the different revenue-raising capacity of local option sales taxes in each taxing jurisdiction. The

amount to be distributed is determined under subsection (b) of this section. The amount each

county may receive is determined by the county's allocation percentage under subsection (c) of

this section. The General Assembly must periodically review the allocation percentages.

(b) Distribution Amount. – The Secretary must calculate a distribution amount in

conformity with this section. The Secretary must deduct this amount, in equal installments,

proportionately from the collections to be allocated each month for distribution under Article 39

and Chapter 1096 of the 1967 Session Laws and Articles 40 and 42 of this Chapter, excluding

the revenue allocated under G.S. 105-469.

For the fiscal year beginning July 1, 2016, the distribution amount is eighty-four million

eight hundred thousand dollars ($84,800,000). For fiscal years beginning on or after July 1,

2017, the distribution amount is the amount for the preceding year, adjusted by the same

percentage of this amount as the percentage change of the total collection of local sales and use

taxes levied under Article 39 of this Chapter and Chapter 1096 of the 1967 Session Laws and

Articles 40 and 42 of this Chapter for the preceding fiscal year.

(c) County Allocation. – The Secretary must, on a monthly basis, allocate to each taxing

county an amount equal to one-twelfth of the distribution amount calculated under subsection (b)

of this section multiplied by the appropriate allocation percentage. If, after applying the

allocation percentages in this section, the resulting total of the amounts allocated is greater or

lesser than the net proceeds to be distributed, the amount allocated to each county shall be

proportionally adjusted to eliminate the excess or shortage. The allocation percentages are as

follows:

County Allocation Percentage Alamance 0.00%

Alexander 1.69%

Alleghany 0.31%

Anson 0.96%

Ashe 0.62%

Avery 0.00%

Beaufort 0.17%

Bertie 0.94%

Bladen 1.03%

Brunswick 0.00%

Buncombe 0.00%

Burke 2.19%

Cabarrus 0.00%

Caldwell 1.72%

Camden 0.48%

Carteret 0.00%

Caswell 1.35%

Catawba 0.00%

Chatham 1.58%


Cherokee 0.24%

Chowan 0.26%

Clay 0.32%

Cleveland 1.43%

Columbus 2.63%

Craven 1.01%

Cumberland 0.06%

Currituck 0.00%

Dare 0.00%

Davidson 4.96%

Davie 1.14%

Duplin 1.97%

Durham 0.00%

Edgecombe 1.86%

Forsyth 0.00%

Franklin 2.44%

Gaston 1.96%

Gates 0.68%

Graham 0.31%

Granville 1.87%

Greene 1.20%

Guilford 0.00%

Halifax 0.76%

Harnett 5.17%

Haywood 0.05%

Henderson 0.68%

Hertford 0.47%

Hoke 2.58%

Hyde 0.03%

Iredell 0.00%

Jackson 0.00%

Johnston 3.26%

Jones 0.63%

Lee 0.37%

Lenoir 1.56%

Lincoln 1.74%

Macon 0.00%

Madison 1.03%

Martin 0.31%

McDowell 0.68%

Mecklenburg 0.00%

Mitchell 0.29%

Montgomery 1.05%

Moore 0.00%

Nash 1.16%

New Hanover 0.00%


Northampton 0.94%

Onslow 1.10%

Orange 0.33%

Pamlico 0.40%

Pasquotank 0.02%

Pender 1.69%

Perquimans 0.50%

Person 0.74%

Pitt 0.16%

Polk 0.74%

Randolph 4.27%

Richmond 0.54%

Robeson 3.00%

Rockingham 2.18%

Rowan 3.90%

Rutherford 1.63%

Sampson 2.10%

Scotland 0.83%

Stanly 1.04%

Stokes 1.99%

Surry 0.00%

Swain 0.32%

Transylvania 0.16%

Tyrrell 0.15%

Union 4.35%

Vance 0.36%

Wake 0.00%

Warren 1.01%

Washington 0.33%

Watauga 0.00%

Wayne 2.27%

Wilkes 1.55%

Wilson 0.39%

Yadkin 1.31%

Yancey 0.52%.

(d) Use of Funds. – The amount allocated to a taxing county under this section must be

divided among the county and its municipalities in accordance with the method by which the one

percent (1%) sales and use taxes levied in that county pursuant to Article 39 of this Chapter or

Chapter 1096 of the 1967 Session Laws are distributed. The county must use the revenue it

receives under this section for economic development, public education, and community college

purposes.

(e) State Contribution. – For fiscal years beginning on or after July 1, 2016, the Secretary

must annually withhold, in equal monthly installments, seventeen million six hundred thousand

dollars ($17,600,000) from sales and use tax collections under Article 5 of this Chapter. The

Secretary must allocate the monthly amount withheld under this subsection to the taxing counties

as follows:


(1) Fifty percent (50%) in the distribution made under Article 39 of this Chapter

and Chapter 1096 of the 1967 Session Laws, not including the revenue

allocated under G.S. 105-469.

(2) Twenty-five percent (25%) in the distribution made under Article 40 of this

Chapter, not including the calculation of the adjustment pursuant to G.S.

105-486(b).

(3) Twenty-five percent (25%) in the distribution made under Article 42 of this

Chapter.

(f) Taxing County. – For purposes of this section, the term "taxing county" means a

county that levies the first one-cent (1¢) sales and use tax under Article 39 of this Chapter or

under Chapter 1096 of the 1967 Session Laws, the first one-half cent (1/2¢) local sales and use

tax under Article 40 of this Chapter, and the second one-half cent (1/2¢) local sales and use tax

under Article 42 of this Chapter.

(g) Adjustments. – The adjustments made under this section to Article 39 of this Chapter

and Chapter 1096 of the 1967 Session Laws and Articles 40 and 42 of this Chapter shall not be

included in the calculations made under G.S. 105-469, 105-522, and 105-523. (2015-241, s.

32.19(b); 2015-268, s. 10.1(e1).)

§ 105-532: Reserved for future codification purposes.



Article 46.

One-Quarter Cent (1/4¢) County Sales and Use Tax.


This Article is the One-Quarter Cent (1/4¢) County Sales and Use Tax Act. (2007-323, s.

31.17(b).)


This Article applies only to counties that levy the first one-cent (1¢) sales and use tax under

Article 39 of this Chapter or under Chapter 1096 of the 1967 Session Laws, the first one-half

cent (1/2¢) local sales and use tax under Article 40 of this Chapter, and the second one-half cent

(1/2¢) local sales and use tax under Article 42 of this Chapter. (2007-323, s. 31.17(b).)

§ 105-537. Levy.

(a) Authority. – If the majority of those voting in a referendum held pursuant to this

Article vote for the levy of the tax, the board of county commissioners may, by resolution and

after 10 days' public notice, levy a local sales and use tax at a rate of one-quarter percent

(0.25%).

(b) Vote. – The board of county commissioners may direct the county board of elections

to conduct an advisory referendum on the question of whether to levy a local sales and use tax in

the county as provided in this Article. The election shall be held in accordance with the

procedures of G.S. 163-287.



election concerning the levy of the tax authorized by this Article shall be:


Local sales and use tax at the rate of one-quarter percent (0.25%) in addition to all other State

and local sales and use taxes."

(d) Repealed by Session Laws 2014-3, s. 14.22, effective May 29, 2014. (2007-323, s.

31.17(b); 2013-381, s. 10.14; 2014-3, s. 14.22.)

§ 105-538. Administration of taxes.

Except as provided in this Article, the adoption, levy, collection, administration, and repeal

of these additional taxes must be in accordance with Article 39 of this Chapter. G.S. 105-468.1 is

an administrative provision that applies to this Article. A tax levied under this Article does not

apply to the sales price of food that is exempt from tax pursuant to G.S. 105-164.13B or to the

sales price of a bundled transaction taxable pursuant to G.S. 105-467(a)(5a). The Secretary shall

not divide the amount allocated to a county between the county and the municipalities within the

county. (2007-323, s. 31.17(b); 2007-345, s. 14.5(a); 2008-134, s. 75; 2009-445, s. 18.)

§§ 105-539 through 105-549: Reserved for future codification purposes.

SUBCHAPTER IX. MULTICOUNTY TAXES.

Article 50.

Regional Transit Authority Vehicle Rental Tax.


The definitions in G.S. 105-164.3 and the following definitions apply in this Article:

(1) Authority. – A regional public transportation authority or a regional

transportation authority created pursuant to Article 26 or Article 27 of Chapter

160A of the General Statutes.

(2) Long-term lease or rental. – Defined in G.S. 105-187.1.

(3) Motorcycle. – Defined in G.S. 20-4.01.

(4) Repealed by Session Laws 1998-98, s. 33.

(5) Public transportation system. – Any combination of real and personal property

established for purposes of public transportation. The systems may include

one or more of the following: structures, improvements, buildings, equipment,

vehicle parking or passenger transfer facilities, railroads and railroad

rights-of-way, rights-of-way, bus services, shared-ride services,

high-occupancy vehicle facilities, carpool and vanpool programs, voucher

programs, telecommunications and information systems, integrated fare

systems, bus lanes, and busways. The term does not include, however, streets,

roads, or highways except to the extent they are dedicated to public

transportation vehicles or to the extent they are necessary for access to vehicle

parking or passenger transfer facilities.

(6) Short-term lease or rental. – A lease or rental that is not a long-term lease or

rental.


(7) U-drive-it vehicle. – Defined in G.S. 20-4.01. (1997-417, s. 3; 1998-98, s. 33;

1999-452, s. 26.)

§ 105-551. Tax on gross receipts authorized.

(a) Tax. – The board of trustees of an Authority may levy a privilege tax on a retailer

who is engaged in the business of leasing or renting U-drive-it vehicles or motorcycles based on

the gross receipts derived by the retailer from the short-term lease or rental of these vehicles. The

tax rate must be a percentage and may not exceed five percent (5%). A tax levied under this

section applies to short-term leases or rentals made by a retailer whose place of business or

inventory is located within the territorial jurisdiction of the Authority. This tax is in addition to

all other taxes.

(b) Restrictions. – The board of trustees of an Authority may not levy a tax under this

section or increase the tax rate of a tax levied under this section until all of the following

requirements have been met:

(1) The board of trustees has held a public hearing on the tax or the increase in the

tax rate after giving at least 10 days' notice of the hearing.

(2) If the Authority has a special tax board, the special tax board has adopted a

resolution approving the levy of the tax or the increase in the tax rate.

(3) The board of commissioners of each county included in the territorial

jurisdiction of the Authority has adopted a resolution approving the levy of the

tax or the increase in the tax rate.

(c) Special Tax District. – If a regional transportation authority created under Article 27

of Chapter 160A of the General Statutes has not levied the tax under this section or has levied the

tax at a rate of less than five percent (5%), it may create a special district that consists of the

entire area of one or more counties within its territorial jurisdiction and may levy on behalf of the

special district the tax authorized in this section. The rate of tax levied within the special district

may not, when combined with the rate levied within the entire territorial jurisdiction of the

authority, exceed five percent (5%). The regional transportation authority may not levy or

increase a tax within the special district unless the board of commissioners of each county in the

special district has adopted a resolution approving the levy or increase.

A special district created pursuant to this subsection is a body corporate and politic and has

the power to carry out the purposes of this subsection. The board of trustees of the regional

transportation authority created under Article 27 of Chapter 160A of the General Statutes shall

serve, ex officio, as the governing body of a special district it creates pursuant to this subsection.

The proceeds of a tax levied under this subsection may be used only for the benefit of the special

district and only for the purposes provided in G.S. 105-554. Except as provided in this

subsection, a tax levied under this subsection is governed by the provisions of this Article.

(1997-417, s. 3; 1998-98, s. 34; 1999-445, s. 3; 1999-452, s. 27.)

§ 105-552. Collection and administration of gross receipts tax.

(a) Effective Date. – A tax or a tax increase levied under this Article becomes effective

on the date set by the board of trustees in the resolution levying the tax or the tax increase. The

effective date must be the first day of a month and may not be earlier than the first day of the

second month after the board of trustees adopts the resolution.

(b) Collection. – A tax levied by an Authority under this Article shall be collected by the

Authority but shall otherwise be administered in the same manner as the optional gross receipts


tax levied by G.S. 105-187.5. Like the optional gross receipts tax, a tax levied under this Article

is to be added to the lease or rental price of a U-drive-it vehicle or motorcycle and thereby be

paid by the person to whom it is leased or rented.

A tax levied under this Article applies regardless of whether the retailer who leases or rents

the U-drive-it vehicle or motorcycle has elected to pay the optional gross receipts tax on the lease

or rental receipts from the vehicle. A tax levied under this Article must be paid to the Authority

that levied the tax by the date an optional gross receipts tax would be payable to the Secretary of

Revenue under G.S. 105-187.5 if the retailer who leases or rents the U-drive-it vehicle or

motorcycle had elected to pay the optional gross receipts tax.

(c) Penalties and Remedies. – The penalties and remedies that apply to local sales and

use taxes levied under Subchapter VIII of this Chapter apply to a tax levied under this Article.

The board of trustees of an Authority may exercise any power the Secretary of Revenue or a

board of county commissioners may exercise in collecting local sales and use taxes. (1997-417,

s. 3; 1998-98, s. 35; 1999-452, s. 28.)

§ 105-553. Exemptions and refunds.

No exemptions are allowed from a tax levied under this Article. No refunds are allowed for a

tax lawfully levied under this Article. (1997-417, s. 3.)

§ 105-554. Use of tax proceeds.

An Authority that levies a tax under this Article may use the proceeds of the tax for any

purpose for which the Authority is authorized to use funds. An Authority shall use the tax

proceeds to supplement and not to supplant or replace existing funds or other resources for

public transportation systems. Authorized purposes for which an Authority may use funds

include the following:

(1) Pledging funds in connection with the financing of a public transportation

system or any part of a public transportation system.

(2) Paying a note, bond, or other obligation entered into by the Authority pursuant

to Article 26 or Article 27 of Chapter 160A of the General Statutes.

(1997-417, s. 3.)

§ 105-555. Repeal of tax or decrease in tax rate.

The board of trustees of an Authority may repeal a tax levied under this Article or decrease

the tax rate of a tax levied under this Article. The same restrictions that apply to the levy of a tax

or an increase in a tax rate under this Article apply to the repeal of the tax or a decrease in the tax

rate.

A tax repeal or a tax decrease becomes effective on the date set by the board of trustees in the

resolution repealing or decreasing the tax. The effective date must be on the first day of a month

and may not be earlier than the first day of the second month after the board of trustees adopts

the resolution. Repeal or decrease of a tax levied under this Article does not affect the rights or

liabilities of an Authority, a taxpayer, or another person arising before the repeal or decrease.

(1997-417, s. 3.)

§§ 105-556 through 105-559. Reserved for future codification purposes.


Article 51.

Regional Transit Authority Registration Tax.


(1) Authority. – Any of the following:

a. A public transportation authority created pursuant to Article 25 of

Chapter 160A of the General Statutes that includes two or more

counties.

b. A regional public transportation authority created pursuant to Article

26 of Chapter 160A of the General Statutes.

c. A regional transportation authority created pursuant to Article 27 of

Chapter 160A of the General Statutes.

(2) Board of trustees. – The governing body of an Authority.

(3) Public transportation system. – Defined in G.S. 105-550. (1997-417, s. 4.)

§ 105-561. Authority registration tax authorized.

(a) Tax Authorized. – The board of trustees of an Authority may, by resolution, levy an

annual license tax in accordance with this Article upon any motor vehicle with a tax situs within

its territorial jurisdiction. The purpose of the tax levied under this Article is to raise revenue for

capital and operating expenses of an Authority in providing public transportation systems. The

rate of tax levied under this Article must be a full dollar amount, but may not exceed eight

dollars ($8.00) a year.

(b) Restrictions. – The board of trustees of an Authority may not levy a tax under this

Article or increase the tax rate until all of the following requirements have been met:

(1) The board of trustees has held a public hearing on the tax or the increase in the

tax rate after giving at least 10 days' notice of the hearing.

(2) If the Authority has a special tax board, the special tax board has adopted a

resolution approving the levy of the tax or the increase in the tax rate.

(3) Except where the levy or increase in tax is necessary for debt service on bonds

or notes that each of the boards of county commissioners had previously

approved under G.S. 159-51, the board of commissioners of each county

included in the territorial jurisdiction of the Authority has adopted a resolution

approving the levy of the tax or the increase in the tax rate.

(c) Resolutions. – The board of trustees and the board of county commissioners, upon

adoption of a resolution pursuant to this section, shall cause a certified copy of the resolution to

be delivered immediately to the Authority and to the Division of Motor Vehicles.

(d) Special Tax District. – If a regional transportation authority created under Article 27

of Chapter 160A of the General Statutes or a regional public transportation authority created

under Article 26 of Chapter 160A of the General Statutes has not levied the tax under this section

or has levied the tax at a rate of less than eight dollars ($8.00), it may create a special district that

consists of the entire area of one or more counties within its territorial jurisdiction and may levy

on behalf of the special district the tax authorized in this section. The rate of tax levied within the

special district may not, when combined with the rate levied within the entire territorial

jurisdiction of the authority; exceed eight dollars ($8.00). The regional transportation authority

may not levy or increase a tax within the special district unless the board of commissioners of

each county in the special district has adopted a resolution approving the levy or increase.


A special district created pursuant to this subsection is a body corporate and politic and has

the power to carry out the purposes of this subsection. The board of trustees of the regional

transportation authority created under Article 27 of Chapter 160A of the General Statutes or a

regional public transportation authority created under Article 26 of Chapter 160A of the General

Statutes shall serve, ex officio, as the governing body of a special district it creates pursuant to

this subsection. The proceeds of a tax levied under this subsection may be used only for the

benefit of the special district and only for the purposes provided in G.S. 105-564. Except as

provided in this subsection, a tax levied under this subsection is governed by the provisions of

this Article. (1997-417, s. 4; 1999-445, s. 4; 2009-527, s. 3(a)-(d); 2013-414, s. 50.)

§ 105-562. Collection and scope.

(a) Collection. – A tax or a tax increase levied under this Article becomes effective on

the date set by the board of trustees in the resolution levying the tax or the tax increase. The

effective date must be the first day of a month and may not be earlier than the first day of the

sixth calendar month after the board of trustees adopts the resolution. To the extent the tax

applies to vehicles whose tax situs is in a county the entire area of which is within the

jurisdiction of the Authority, the Division of Motor Vehicles shall collect and administer the tax.

To the extent the tax applies to vehicles whose tax situs is in a county that is only partially within

the jurisdiction of the county, the Authority shall collect and administer the tax. The Authority

may contract with one or more local governments in its jurisdiction to collect the tax on its

behalf.

Upon receipt of the resolutions under G.S. 105-561, the Division of Motor Vehicles shall

proceed to collect and administer the tax as provided in this Article. The tax is due at the same

time and subject to the same restrictions as in G.S. 20-87(1), (2), (4), (5), (6), and (7) and G.S.

20-88. The Division of Motor Vehicles may adopt rules to carry out its responsibilities under this

Article.

(b) Scope. – Only vehicles required to pay a tax under G.S. 20-87(1), (2), (4), (5), (6),

and (7) and G.S. 20-88 shall be subject to the tax provided by this Article. Taxes shall be

prorated in accordance with G.S. 20-95.

(c) Tax Situs. – The tax situs of a motor vehicle for the purpose of this Article is its ad

valorem tax situs. If the vehicle is exempt from ad valorem tax, its tax situs for the purpose of

this Article is the ad valorem tax situs it would have if it were not exempt from ad valorem tax.

(1997-417, s. 4; 2009-527, s. 5(a).)

§ 105-563. Modification or repeal of tax.

The Board of Trustees may, by resolution, repeal the levy of the tax under this Article or

decrease the amount of the tax, under the same procedures and subject to the same limitations as

provided in G.S. 105-561. A tax repeal or a tax decrease becomes effective on the date set by the

board of trustees in the resolution repealing or decreasing the tax. The effective date must be on

the first day of a month and may not be earlier than the first day of the sixth calendar month after

the board of trustees adopts the resolution. Repeal or decrease of a tax levied under this Article

does not affect the rights or liabilities of an Authority, a taxpayer, or another person arising

before the repeal or decrease. (1997-417, s. 4; 2009-527, s. 5(b).)

§ 105-564. Distribution and use of proceeds.


The Authority shall retain the net proceeds of taxes it collects under this Article. Taxes

collected by the Division of Motor Vehicles under this Article shall be credited to a special fund

and the net proceeds disbursed quarterly to the appropriate Authority. Interest credited to the

fund shall be disbursed quarterly to the Highway Fund to reimburse the Division of Motor

Vehicles for the cost of collecting and administering the tax.

An Authority that levies a tax under this Article may use the proceeds of the tax for any

purpose for which the Authority is authorized to use funds. An Authority shall use the tax

proceeds to supplement and not to supplant or replace existing funds or other resources for

public transportation systems. (1997-417, s. 4.)






Article 52.

County Vehicle Registration Tax.

§ 105-570. County Vehicle Registration Tax; shared with municipalities.

(a) A county is considered an authority under Article 51 of this Chapter, and the board of

commissioners of that county is considered the board of trustees of the authority under Article

51, except that the maximum tax that may be levied by a county under this Article is seven

dollars ($7.00) per year.

(b) A county may not levy a tax under this Article unless the county or at least one unit of

local government in the county operates a public transportation system.

(c) Any tax levied under this Article shall, after the receipt of those funds from the

Division of Motor Vehicles, be retained or distributed by the county on a per capita basis as it

receives those funds as follows:

(1) Pro rata (i) retained by the county based on the population of the county that is

not in an incorporated area, and (ii) distributed to the municipalities within the

county based on the population of that municipality that is located within that

county. To determine the population of each county and municipality, the

county shall use the most recent annual estimate of population certified by the

State Budget Officer.

(2) Notwithstanding subdivision (1) of this subsection, if a municipality to which

funds are to be distributed does not operate a public transportation system, the

population of that municipality shall be excluded from the calculations of

subdivision (1) of this subsection and no distribution shall be made to that

municipality.

(3) Notwithstanding subdivision (1) of this subsection, if a county for which

funds are to be retained does not operate a public transportation system, the


population of that county not in an incorporated area shall be excluded from

the calculations of subdivision (1) of this subsection, and the county shall not

retain any funds.

If a county that does not retain funds or a municipality that does not receive an allocation of

funds on account of subdivision (2) or (3) of this subsection begins to operate a public

transportation system, that county or municipality shall begin retaining or receiving funds

beginning the first day of July that is more than 30 days thereafter.

(d) The proceeds of a tax imposed under this Article may be used by that county or

municipality only to operate a public transportation system, including financing, constructing,

operating, and maintaining that public transportation system. The term "public transportation

system" has the same meaning as defined in G.S. 105-506.1.

(e) As used in this section, operation of a public transportation system includes a contract

or interlocal agreement for operation of the public transportation system by another county or

municipality, or by a transportation authority created under (i) a municipal charter; or (ii) Article

25, 26, or 27 of Chapter 160A of the General Statutes. As used in this section, operation of a

public transportation system also includes a contract with a private entity for operation of the

public transportation system.

(f) An interlocal agreement under this section may also deal with allocation of funds

between a municipality and county for operation by the county of a human services public

transportation system within the municipality when the municipality also operates a public

transportation system.

(g) This Article is supplemental to Article 51 of this Chapter. (2009-527, s. 4.)































SUBCHAPTER X. LOCAL OPTION COUNTY TAXES.

Article 60.

Land Transfer Tax.

§ 105-600: Repealed by Session Laws 2011-18, s. 1, effective March 31, 2011.



NC General Statutes - Chapter 105 1 ... - Onslow County

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